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The Ideal “Green” Business Plan:
A Venture Capitalist’s Perspective
Presentation at the BYOB
Spring 2011
Po Chi Wu, Ph.D.
Adjunct Professor
HKUST
Spring 2011
What is business planning?
On-going process
Why write a business plan?
Who will read it?
Why will they read it?
After reading it, what will they do?
After feedback, how will your plan change?
“Green” Businesses
How are “green businesses” different?
More stakeholders
More complicated - multi-disciplinary
Longer-term
More costly
Different investor mentality
Higher uncertainty (of ROI), higher risk
What is “Ideal”?
Powerful, inspiring Vision & Mission
Experienced, committed TEAM
Outstanding “partnerships”
Proprietary tech/business model
Strong government support/alignment
Patient investors
Solid Resources, Processes, Values
Top Sectors in 2010
Solar accounted for 24% ($1.83 billion) of total
Transportation (17%, $1.35 billion)
Energy Efficiency (14%, $1.05 billion). Measured by number of
deals, was most popular sector (21% share, 151 deals)
followed by Solar (16% share, 117 deals).
N. America accounted for 68 percent of total invested, 21%
for Europe & Israel, 10% for Asia
US VC Investment in Cleantech
2010 US VC investment reflected a turning point in the
industry due to improving credit and capital markets, the
deployment of stimulus spending and increasing corporate
cleantech adoption
Increased by 8% to $3.98B in 2010 from $3.7B in 2009 and
deal total increased by 7% to 278
Investments by Segment
Energy/Electricity Generation segment - $1.32B in 2010
Solar increased by 77% to $1.58B
In Q4 2010 solar investments reached $279.17M
Largest - Abound Solar, Fort Collins, CO, provider of
photovoltaic modules, raised $111.18M
SoloPower Inc. of San Jose, CA, a solar cell developer, raised
$51.57M
Industry Products and Services - 79% year on year increase,
raised $1.24B through a total of 80 deals in 2010
Investments in 2010
In 4Q - $355.84M, including $100M in Elevance Renewable
Sciences Inc., of Bolingbrook, IL, a provider of specialty
chemicals derived from natural oils, and $80M in SAGE
Electrochromics Inc. of Fairbault, MN, a provider of
electrochromic smart window products
Electric vehicles (EV) and charging stations - $695.17M, e.g.,
$350M in Better Place, Fisker Automotive, and Coda
Automotive, Inc.
EV coalescing ecosystem: utilities, big box retailers, rental
car and battery storage,”e.g., Panasonic invested $30 M in
Telsa Motors.
Investments in 2010
Energy Efficiency segment dropped 9% from 2009 to 2010, to
$688.99 million through 68 deals
In Q4, OPOWER, Inc., of Arlington, VA, an energy consumption
technology provider raised $50M
Seed stage – $477M in 18 deals, averaging $26.5M each (8 in
2009)
Second rounds accounted for $1B
Exits in 2010
Globally, cleantech IPOs raised $16.3B for 93 companies
China accounted for 68% (63) of the IPOs completed and 61%
($10.0 billion) of the total amount raised
China Goldwind, the Xinjiang-based wind turbine
manufacturer raised $917M on the Shenzhen Stock Exchange
3 IPOs in US: Amyris, Tesla Motors and Codexis, Inc.
M&A totaled an estimated 716 transactions in 2010, of
which totals were disclosed for 203 transactions totaling
$36.0 billion
Issues to Watch Out for…
Over-optimistic, idealistic (wishful) thinking
Timing
Alignment
People (cross-industry culture)
Financing model (payer/beneficiary)
“Resistance”
Accelerating rate of change – driven by China
How to Proceed?
Comprehensive preparation to understand complexity
Extensive networking – cultivate relationships
“Problem-solving” => “innovation” in all domains
PASSION & CURIOSITY MUST GROW
Hot Trends for 2011
1. Sustained worldwide VC investment
2. Venture capital will continue to cede importance
to corporate and non-institutional capital
3. A return to early stage venture investments
4. Energy efficiency emerges as the clear rock star of
cleantech
5. Biofuel investment could reach former highs
Hot Trends for 2011
6. Nuclear surprises, but not in U.S.
7. Recycling and mining will attract more investment
8. Natural gas emerges to threaten solar and wind for
utility renewable power generation
9. China becomes the most important market for
cleantech: if you're not selling in China, you won't
matter
Source: http://www.globenet.com/articles/2010/december/3/predictions-forcleantech-in-2011.aspx