Transcript Cleantech venturing - performance, players and potential Presentation to Workshop on Innovative Options for Financing the Development and Transfer of Technologies , October 2004 Prepared.

Cleantech venturing - performance, players
and potential
Presentation to
Workshop on Innovative Options for Financing the
Development and Transfer of Technologies , October 2004
Prepared by Nicholas Parker, Chairman
Cleantech Defined
• Embraces products and services that optimize the
use of natural resources, while reducing ecological
impact and adding economic value by significantly
lowering cost and improving profitability.
• Cleantech spans many industries, from alternative
forms of energy generation to water purification to
materials-efficient production techniques.
• Not classic “environmental” technology – more like
“biotech” as an investment theme.
Our Background & Mission
• Cleantech Venture Network (“Cleantech”) is a private company
founded in 2002 by investors to provide information-based services
to an emerging community of clean technology venturers.
• Our mission is to accelerate the growth of investment into venturegrade companies deploying "clean technologies" through the
provision of high quality market facilitation activities.
• Our principal office is in Michigan, with a presence in Canada,
Europe and on the US West Coast
• We have 120 full members with >$3.4 billion in assets focused on
cleantech venturing, as well as over 400 affiliate members
The Founders
Nicholas Parker:
Substantial experience in starting and
investing venture capital funds. Currently
director of leading cleantech investment
group.
Keith Raab:
Significant expertise in creating and
managing investment networks.
Engineering and business degrees and
startup experience.
Current Services
• Venture Forums – provide access to high quality
deal flow, industry information, and networking
opportunities
• Venture Monitors – provide investment tracking
and quarterly analysis, along with industry updates,
trends and forecasting.
• On-line Investment Opportunities – provides
access to cleantech investment opportunities in real
time with minimal transactional costs
• Research – provide subscription based reports on
investment returns and prospects leveraging
proprietary data streams and industry partnerships
Accomplishments
• Five highly successful forums in Toronto, San
Francisco & New York
• Venture Monitor established as the source on
cleantech venturing
• Media coverage in over 80 publications including
WSJ, FT, Newsweek, Red Herring, Venture Capital
Journal.
• Sophisticated website, offering member services
• High-profile venture advisory board
• Currently expanding into Europe with first Forum
planned for Spring 2005 in Paris
Cleantech Venture Forums
• Cleantech I – Nov 2002, Toronto
– 20 presenting companies: 80 investors
• Cleantech II – April 2003, San Francisco
– 22 presenting companies: 230 investors
• Cleantech III – October 2003, New York
– 20 presenting companies: 200 investors
– Pre-event workshops; inaugural Pioneer Awards; significant PR
• Cleantech IV – April 2004, San Francisco
– 22 presenting companies: 300 investors
– Cleantech 2003 awards; major institutional investor involvement
• Cleantech V – October 2004, Toronto
– 21 presenting companies: over 200 investors
– Discovery showcase
More than 500 different Forum attendees: over $230M raised to
date by presenting companies
Cleantech Venture Monitors
In Each Issue:
• Cleantech Investments
Monitored
• Cleantech Investments
Profiled
• Clean Capital Stories
• Venture Activity
• Clean Bulletin Board
Over $3 billion in deals tracked!
Established reference for media and other stakeholders
on cleantech venture industry
Pioneering Research
• Responding to an unmet demand for reliable research on the
state, performance and opportunities in the cleantech area.
• Initiated preparation and publication of the first report on
cleantech venture returns, exits and prospects.
• Report underwritten by sponsors – EnerTech Capital,
Expansion Capital Partners, CDP, Rustic Canyon, Sustainable
Asset Management, SDTC.
• First report provided preliminary data suggesting strong
historical and projected returns to cleantech venture investors.
• Future reports will cover topics such as State of the Industry,
VC Directory as well as more detailed data on investor returns
“Cleantech” – the Sustainable Venturing
Opportunity
Alongside the information revolution is an industrial revolution
reshaping the design and manufacture of almost everything
that we see around us. The revolutionary products being
developed today have dramatic improvements over the old
because they:
 Are lighter, smarter and stronger.
 Are cheaper to manufacture and operate.
 Are less carbon-intensive and more energy efficient
 Offer greater service utility per unit of material input
 Enable virtually zero waste and/or emissions
Cleantech Segments
Clean Energy
Cleaner
Production
CONVERGENCE
Clean Water
CONVERGENCE
Advanced Materials & Nanotechnology (e.g. catalysts and membranes)
Information Technology & Internet (e.g. advanced meters and sensors)
Cleantech is a category like biotech, not a sector.
Who are the Buyers?
• Pharmaceutical, Semiconductor and Thermoelectric
companies who use large quantities of ultra pure water
• Automobile and Aircraft Manufacturers needing higher
fuel efficiency from lighter materials
• Utilities and Large Energy Users demanding reliable,
affordable and low carbon power supplies
• Consumer Electronics companies needing to reuse
valuable components and materials
• Agricultural producers requiring safer and more precise
inputs and products
• Logistics organizations seeking more efficient use of
fleets and containers
Cleantech is not Envirotech
Envirotech
1970s-80s
Cleantech
mid 1990s -
• Regulatory driven market
• Compliance-based purchasing
• “End-of-pipe” tech, eg
scrubbers on smoke stacks
• Chemical science
• Traditional engineering
• Slow growth markets, eg
waste management
• “Save the world” mentality
• Low IT use
• Economic market drivers
• Productivity-based purchasing
• “Front-of-pipe” tech, eg zero
emission plants
• Biological & materials science
• Systems design & engineering
• Rapid growth markets, eg
solar energy
• “Entrepreneurial” mentality
• High use of IT
Cleantech - “Leapfrog” Opportunity
The market for cleantech is rapidly developing due to a industrial restructuring
and modernization; scientific and engineering advances in microelectronics,
biology, chemistry and physics; changing socio-political values; and,
deepening concern for environmental sustainability.
Some clean technology markets are growing at compound annual rates of
more than 20%, for instance those for solar energy and natural pesticides, as
costs come down, products improve and consumer demand strengthens.
Emerging fields such as nanotechnology offer the prospect of products that
cost less, perform better, and sustainably satisfy human demand in ways that
could not be done or imagined previously.
The impact of cleantech is ubiquitous: there are large and highly disruptive
market opportunities emerging in the multi-billion dollar agricultural,
manufacturing and transportation sectors, as well as in the fundamental
enabling areas of energy and water.
Example: Cleantech and Nanotech
TIME (in years)
Tools for V isualization, Measurement, Manipulation, Process Control
Enabling technologies
for most of these
applications include
• nano tubes
• nano crystals
• nano cones
• nano horn
• nano rods
Self-Assembling Structures
20
Embedded Ttechnology in Materials
10
Recyclable Polymers
Biosensors
Catalysts
Coatings
Resource
Productivity
Fuel/Energy Storage
Conductive Polymers
Catalysts
Coatings
Alternative
Energy
Ultra Clean Diesel
Coal Liquefication
Catalytic Converters
Miniturized Networks
Conventional
Energy
ILLUSTRA TIVE APPLICA TIONS
Nano pourous Materials
Recyclable Polymers
Biosensors
Membrane Filter
Water & W aste
Treatment
Cleantech Examples
•
Agriculture - bio-based materials, farm efficiency technologies, micro-irrigation
systems and natural pesticides
•
Energy - distributed and renewable energy generation and conversion
(including fuel cells, geothermal, wind and photovoltaics); energy management
systems; superconducting transmission; energy storage and power quality; key
enabling technologies; and related Internet and information technology-based
services
•
Manufacturing - advanced packaging; high value materials recovery; natural
chemistry; sensors; smart construction materials; and precision manufacturing
instruments.
•
Transportation - hybrid vehicles, lighter materials, smart logistics software and
telecommuting
•
Water - water recycling and ultra-filtration systems (UV and membrane based
systems), sensors and automation systems and desalination equipment
CLEANTECH vs OVERALL VC
CleanTech
400
350
300
250
200
150
100
50
0
% of Total VC
376
10.0%
321
321
7.2%
7.1%
6.3%
169
219
5.3%
320
7.5%
313
7.4%
8.0%
245
6.0%
5.0%
4.0%
2.6%
2.0%
0.0%
Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '04
Cleantech Venture Activity
•
$1.1B invested in North America during 2002, $1.2B in 2003, for about
6% market share, up from about 2% in the late 90s. Momentum
building.
•
Approximately 450 investors in 400 deals over 2002-2003 – from
specialists to corporations to mainstream VC investors
•
Energy related companies account for 40% of all cleantech deals,
followed by advanced materials/nanotech, water purification and
management, materials recovery & recycling and sustainable
agriculture and precision farming
•
Strong pipeline of early stage deals requiring follow-on financing,
especially in the US North East and Canada
•
Geographic dispersal and average deal size broadly tracks overall deal
activity although the US West Coast is less dominant and the North
East has the highest number of start-ups
INVESTMENT BY SEGMENT
2002-2003
Materials Recovery and
Recycling, $208,658,538,
8%
Water Purification and
Management,
$115,276,900, 5%
Agriculture and Nutrition,
$114,160,000, 5%
Air Quality, $131,557,500,
5%
Transportation and
Logistics, $69,522,420,
3%
Enabling Technologies,
$229,253,400, 9%
Materials and
Nanotechnology,
$406,312,000, 16%
Manufacturing/Industrial,
$145,052,900, 6%
Energy Related ,
$1,058,228,131, 43%
Environmental IT,
$2,640,000, 0%
Investment by Energy Industry Segment
for 2002-2003 (est.)
Energy and Efficiency,
$74,320,431, 7%
Energy Storage,
$186,398,900, 18%
Energy Infrastructure – IT related
$303,918,900, 29%
Source: Cleantech Venture Network LLC
Energy Generation,
$493,589,900, 46%
Investors in Cleantech Funds
Chrysalix Energy Management
Ballard Power Systems
BASF Venture Capital
The BOC Group
The Boeing Company
Duke Energy
The Mitsubishi Corporation
Shell Hydrogen
EnerTech Capital Partners
SAM Private Equity LP
AES Corporation
CDP Capital Technology Ventures
Avista Energy
EDF Ventures (Electricité de France)
Ballentine Capital Fund
Gerling
Bank of America
Hydro Quebec Capitech
Battelle Memorial Institute
Mitsui & Co. Ltd.
ChevronTexaco Technology Ventures
Norsk Hydro Technology Ventures
CIBC
Ontario Power Generation
Crow Holdings
Suncor Inc.
DTE
Swiss Re
Dyson-Kissner-Moran
Electricite de France - France
Endesa - Spain
Exelon
First Energy
Fortum - Finland
Gas Technical Institute
Harbourvest Partners
Hunt Power
Hydro-Quebec - Canada
Integrated Electrical Services
Mellon Ventures
Orion Group - New Zealand
Partners Group
People's Energy
Pepco
Permal Capital
Safeguard Scientifics
Stephens, Inc.
TotalFinaElf - France
Nth Power
ABB
Alliant Energy
Avistar
Ballentine Capital
Banc of America
CDP Capital
CH Energy
CIBC Capital Corp
Cinergy Ventures
Dominion
Electricite de France
Emerson Ventures
EnergyEast
EPCOR
FirstEnergy
Hydro-Quebec Capitech
Itochu International
Lehman Brothers
Meridian Energy
NiSource
Norsk Hydro Venture
OPG Ventures
PacifiCorp
Pantheon Ventures
Sierra Pacific Power
Swedish Pension Fund
Williams, Jones & Associates
Some Success Stories
•
•
•
•
•
•
•
•
•
•
•
Ballard(CAN) – fuel cells; MC ~C$1.5Billion
Xantrex(CAN) – power conversion equipment; MC ~C500Million
American Power (US) – power conditioning; MC ~US$3.0Billion
Vestas/NEG Micon(DEN) – wind turbines; MC ~EUR1.6Billion
Zond (US) – wind turbines, 7x return to investors when sold
Trojan Tech (CAN) – ultraviolet technologies, MC ~C$200Million
Zenon (CAN) – membrane technologies; MC ~C$600Million
USFilter (US) – water technologies; sold in ’99 for ~US$8.2Billion
Pall Corp.(US) – filtration/separation tech; MC ~US$3.6Billion
Nanogram (US) – battery materials, 90% IRR to investors when sold
Silicon Energy (US) – energy IT, high multiple to investors when sold
More success stories and more stable returns than commonly understood
Attractive Financials & Fundamentals
•
•
•
•
•
•
•
Category not over invested
Low enterprise valuations
Lower capital intensity than other categories
Strong trade exit potential – most M&A
Global corporate, consumer and government demand
Evidence of rising public market interest
Pro forma portfolio IRRs equal or better than other
sectors
• Strong leverage on public sector incentives
Opportunities & Challenges
• Clean technologies reflect long-term trends – decarbonization,
lighter materials, greater social transparency etc – accelerated by
technology and the eco-footprint of 6.1 bn people. Trends +
acceleration = new sustainable market opportunities
• Investors can play a key role by picking out and nurturing the
potential winners for high financial ROI and societal benefits
• Challenges include:
• Fostering “serial” cleantech entrepreneurs
• Building big-small partnerships
• Building investment syndicates
• Attracting patient and smart capital
• Gaining recognition as an investment category
• Earning sell-side analyst coverage
Summary
Cleantech can help reduce sustainability risks while
providing opportunities to leapfrog into new markets with
high margin revenue streams
Cleantech emerging as a new asset category with
increasing evidence of venture grade ROI potential
SRI oriented investors need to allocate 5-7% of assets to
cleantech private equity, either through established or
emerging managers
Cleantech Venture Network is positioned to assist
investors and entrepreneurs to succeed in this next and
necessary wave of venture-backed innovation
Thank You!
We welcome your interest and support