Wednesday, September 8, 2010

"Top Ten Solar Venture Capital Investors"

I'm reminded of a quote:
"Fundamentally VCs are risk adverse – they want no risk in the deal, if we could handle risk we'd be entrepreneurs."
– Victor Westerlind, General Partner at Cleantech VC firm Rockport Capital
Again, via Greentech and a winner of our prestigious Climateer Line of the Day.

Keeping up with the VC's, courtesy of Greentech:
Solar VC investors sorted by style points and vision, not IRR.
The braintrust at Greentech Media suggested I write an article on the top ten solar venture capital firms. Even despite what Sanjay said in this article.
As I started writing, I realized that the normal metrics for grading VCs -- IRR, quality of exits, etc. -- don't apply to today's solar investors, at least not in any meaningful way.  The fact is that very little, if any, of the billions of VC dollars put into solar in the last few years have yielded the type of results that VCs look for. 

You'd have to go back to SunPower, Suntech, First Solar, Evergreen Solar and GT Solar to cite solar firms that have yielded successful IPO exits. Those companies, save for Evergreen, were not funded by your standard Sand Hill Road-type venture firms. The Communist Party was Suntech's largest investor while members of the Walton Family sustained First Solar. T.J. Rodgers rescued SunPower with a $750,000 investment (written on a personal check) in 2001 after the company got rejected up and down the valley.

There has been some M&A.  Applied Materials has made some strategic acquisitions, as have Suntech, SunPower and First Solar.  But few of those acquisitions were VC-funded, and few yielded the 10X returns that VCs bank on.  

So, absent real financial metrics, I am free to list ten VC firms that invest in solar and select them for testicular fortitude, style points and sheer hype and vision.

Here we go:

Khosla Ventures and Kleiner Perkins top the list. Why? One, as investors in Ausra, they can certainly point to that firm's acquisition by Areva as an exit, if not on the order of Cerent.  Ray Lane, a partner at Kleiner told me that they were going to let Ausra "get caught" in what amounted to a modest bidding contest for the concentrating solar power firm.  Two, both firms are committed to solar and are putting their money where their mouths are by investing across the solar value chain -- and in KP's case, across early and late stages.  Both Vinod Khosla and KP's John Doerr are thought leaders and vocal boosters for intelligent greentech policy.

Kleiner Perkins' solar portfolio:
  • Alta Devices: Solar cells that aim to be 30 percent efficient at a module cost below 50 cents per watt; based on compound-semiconductors
  • Amonix: Utility-scale concentrated photovoltaics
  • Enphase: Microinverters
  • Kotak Urja: India-based solar PV and solar thermal
  • MiaSolé: Thin-film CIGS
  • Solexel: 3D, high efficiency mono-crystalline silicon cell 
  • Sundrop Fuels:  Solar driven gasification
  • Solasta -- a-Si in a nano-coax structure (shut down)

Khosla Ventures' solar portfolio:
  • PVT: Integrated system provides electric and heating for homes
  • Cogenra (formerly SkyWatch Energy): solar technology that produces electricity and hot water.
  • Stion: Thin-film CIGS
And this being KP and Khosla -- you can imagine that there are a few stealth firms not yet exposed to the sun.  More on KP's John Doerr in an article later today.

VantagePoint Venture Partners
VantagePoint thinks big and they think long-term -- in solar and in their other greentech investments like Better Place. When the firm invested in BrightSource Energy, now a force in solar thermal power plants, they made sure they had the resources and the commitment from the start. They knew they'd need billions of dollars and prominent industry partners and EPCs like Bechtel.  According to VantagePoint CEO Alan Salzman, their view is that the company has to scale and that "there's no cheap way to get to one gigawatt."
VantagePoint's solar portfolio:
The firm continues to look for more solar investments.