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‘Tis the season for next-year forecasts, so VentureBeat asked a few cleantech venture capitalists for their thoughts on clean energy trends to watch in 2011.
Nat Goldhaber of Claremont Creek Ventures tells us that next year is The Year for some good old IPO action in green (we list a few of the companies he thinks are good candidates below) — as long as there’s not another global downturn. In that case, “all bets are off,” he cautions.
Peter Wagner of Accel says he sees next year as a year where success of startups will be determined by whether they can make a bottom-dollar appeal to enterprises and convince businesses to sign on to products on the basis of standalone return on investment (as opposed to, say, government incentives or subsidies). Smart buildings — startups that make building controls that save companies energy and money — are a prime area for mergers and acquisitions, Wagner predicts. It’s a trend VentureBeat has previously reported on.
Wagner, however, thinks this might not be the year for IPOs.
“It’s early to expect a large number (of exits) because many of the really good investments are just being made now,” Wagner says. “What we are likely to experience is a reorientation of the venture market on opportunities that stand on their own two feet.”
Dave Dreessen, partner at Battery Ventures, echoed that sentiment.
“I’d guess that we see a modest 2011, with a strong 2012 to follow,” Dreessen said. “Given that cleantech companies address huge markets and have strong growth prospects, public market investors are definitely looking to put capital to work in cleantech.”
Wagner of Accel named a couple of hot trends to watch for in cleantech — energy efficiency (which was the top sector venture capitalists invested in last quarter), energy products tied to cloud computing (recently endorsed by Bill Clinton), building controls and consumer efficiency.
Jason Matlof, partner at Battery Ventures also named energy efficiency and controls as a leading sector in cleantech next year. He added that scheduling technologies, power electronics and smart grid-oriented products would be hot to watch (VentureBeat made a similar prediction this fall when organizing our GreenBeat 2010: Charging the Super Grid).
“I’d say that the companies most likely to get out are less exotic and less aggressively marketed than what we’ve been seeing. They are less likely to require technical ‘leaps of faith’ and will have rapidly ramping revenue and gross profitability,” said Matlof.
All in all, it sounds like investors are fairly united in looking towards more proven and capital-efficient technologies, a trend that’s been showing in the markets as of late.
“When the first round of cleantech investments were being made, it felt too frothy, too much like the old bubble days. We called it a ‘bub’ – an imcomplete bubble. There was all the enthusiasm and no exits,” Goldhaber says. “I think the frothiness has come off of our industry … and now we can get down to the serious business of building sustainable long-term companies.”
Another interesting trend to watch as pointed out by a few consulting companies as of late: natural gas is poised to rise as coal plants get retired, and could pose a threat to solar and wind because it’s cheaper and the infrastructure for it already exists.
Here are some top cleantech IPO contenders for 2011, per Goldhaber:
Opower — The consumer engagement and energy efficiency company is something of a energy tech darling and just raised $50 million in a third round of financing. If there’s any company that could fit the mold of a cleantech poster child, Opower could be it, Goldhaber says. Wagner, whose firm backed Opower, said: “They’ve cracked the code on how to synchronize their business model without a utility customer. That’s a hard thing to do and they’ve done it extremely well.” (Disclosure: MHS Capital, which backs Opower, has also invested in VentureBeat.)
Serious Materials — A big winner in 2008 stimulus funding, Serious Materials quickly made a name for itself in green building materials and recently launched a software that manages and lowers building energy consumption, one of the hot new areas in energy tech.
SolarCity or SunRun — These two startups have mastered the solar leasing model, which gets solar panels on roofs without forcing residents to pay for the entire system; rather, they lease the equipment (SolarCity and SunRun handle installation) and pay for the solar power generated, which is usually less than conventional electricity rates. SunRun pioneered the model and has rocketed in growth in three years since being founded. SolarCity is also expanding to offer energy audits, and recently won a big project with Wal-Mart. “One or both will go out (for IPO),” Goldhaber said.
Silver Spring Networks — Declared a superstar home run startup (video) at GreenBeat 2010, this smart grid communications company is consistently named a top cleantech player. It has also expanded to make demand response offerings as of late. Every once in awhile, rumors swirl about an IPO from Silver Spring, but perhaps this will be the year it finally happens.
BrightSource Energy — Like Silver Spring, it’s a big company that does big projects, most recently breaking ground on the 392-megawatt Ivanpah concentrated solar installation in the Mojave Desert of California. Dow Jones Venture Wire reported that the company is, in fact, quietly preparing to go public next year.
Ice Energy — The company makes an energy storage unit that freezes ice overnight (when electricity is cheaper), then melts it during the day for air conditioner cooling units. It reportedly won a project with Target recently and raised $24 million in third-round funding.
MiaSolé or Solyndra — Both of these American solar startups have come under pressure lately from China, where solar manufacturers enjoy strong government support and have been able to undercut global competition in price. But MiaSolé recently beat its own record in solar panel efficiency. Solyndra has to prove some more traction given the November closure of its first factory and a nixed IPO earlier this year, but it enjoys a $535 million conditional loan guarantee from the Department of Energy. “It would surprise me if one of (them) does not figure out an exit,” Goldhaber said.
Other companies that have filed S-1s include Gevo, PetroAlgae and SemiLED.
[Image via Flickr/meddygarnet]
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