Venture Capitalist: Early Stage 'Cleantech' Attractive

Written by Ucilia Wang

The venture-capital world will likely see a sharp decline in investment dollars and smaller deals in the fourth quarter, as investors and startups figure out how to weather the sinking economy.

Boston-based VC Rob Day made that prediction on his Cleantech Investing blog last Friday, at the end of a week that was marked by sharp declines of the Dow Jones Industrial Average and solar stocks. The Dow had sunk for eight straight days by Friday, capping the worst week ever in its 112-year history.

First Solar's ( FSLR) stock lost 26 percent of its value last week. Shares of Suntech Power Holdings ( STP) lost 28 percent of their value, while Evergreen Solar's ( ESLR) lost 25 percent.

With no visible end to the financial market crisis, VCs will likely prefer early stage greentech companies, which won't have to worry about exits through acquisitions or initial public offerings any time soon, Day wrote.

"So I think (guess?) Q4 will see a moderate decline in the number of cleantech deals overall, a bit of a shift into earlier-stage investing, and a big decline in aggregate dollar amounts," he wrote. "And early stage will be the first to pick back up going forward. Early stage cleantech venture capital remains a very attractive investment area."

Day also predicted "big-name cleantech startups will implode" during the downturn. Companies that have raised a lot of money to support fast expansion plans -- and that expected to raise more large sums in the near future -- will suffer, he said. (Don't miss " Balance Sheets Matter Now More Than Ever")

On that note, here is some recent funding news.

Public Companies

  • Ascent Solar (ASTI) is getting $15 million from Norsk Hydro Over-the-counter ticker: NHYDY, an aluminum company whose stake in Ascent Solar will rise to 35 percent. Littleton, Colo.-based Ascent Solar develops copper-indium-gallium-diselenide solar cells using plastic substrates. Last month, the company said it will begin supplying Spanish roofing firm Texsa with thin films that will be integrated into Texsa's products.
  • Beacon Power Corp. (BCON) has lined up a buyer or buyers who plan to spend $7.9 million for 8.7 million units, which each unit representing one share of Beacon's common stock and one warrant to buy a company's common stock at an exercise price of $1.20 per share. The Tyngsboro, Mass., company intends to use some of the money for constructing flywheel systems for energy storage. Beacon expects the fund raising to close on Oct. 15.
  • Materials developer Altairnano Nanotechnologies (ALTI) raised $10 million by selling shares of its common stock to Al Yousuf, a Dubai investor who also has invested in Phoenix Motorcars and Zap. Altainano, based in Reno, Nev., is developing materials for making car and energy-storage batteries, air-purification systems and others. Altairnano raised $40 million from Al Yousuf in 2007.
  • Funds

  • The Asian Development Bank will extend RMB$800 million ($117 million) in a partial loan-guarantee program to fund energy-efficient projects in China. The bank is partnering with Johnson Controls (JCI) to retrofit or construct new buildings using energy-efficiency technologies.
  • Private Companies

    Solar:

  • Standard Solar Inc. raised $8.5 million to expand its solar-installation business in residential and commercial markets. The Gaithersburg, Md., company plans to use most of the money on marketing. Truecast Capital and other undisclosed investors contributed to the new round.
  • Apollo Solar raised $4.5 million for expanding production and marketing of its inverters, charge controllers and other electronics for solar-energy systems. The Bethel, Conn., company didn't disclose investors.
  • 1366 Technologies is looking to raise $50 million to build a 25- to 30-megawatt commercial silicon solar-panel factory, noted Greentech Media analyst Michael Kanellos in a blog post. The Lexington, Mass., startup already has built a prototype production line. It raised $12.4 million from Paloris Venture Partners and North Bridge Venture Partners last year.
  • Schott Solar nixed its initial public offering after realizing that the markets really were as bad as reported widely in the press. The Germany solar-panel maker decided to postpone the ¿500 million ($741 million) IPO in September before making a go of it a week later. Schott Solar finally ended the IPO plan last week.
  • Other:

  • Silver Spring Networks, which develops smart-metering equipment and software, raised $75 million from Kleiner Perkins Caufield & Byers, Foundation Capital, JVB Properties and Northgate Capital. Silver Spring counts Florida Power & Light Co. and Pacific Gas and Electric Co. among its customers.
  • OwnEnergy raised an undisclosed Series A round from EnerTech Capital Partners, Contour Venture Parnters and New York City Investment Fund. OwnEnergy, based in Brooklyn, N.Y., seeks to partner with landowners and communities to finance and build 10-megawatt to 80-megawatt wind farms. The company is looking to raise $100 million to develop its first project, reported VentureWire.
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