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VCs checking out plug-in hybrids, other cleantech

calcars.jpgHere's our VCInsider column in the Mercury News today about action in Silicon Valley surrounding plug-in hybrid electric vehicles. Or here's another version, if you're still avoiding our registration page. (By the way, Matt's VCInsider column for the Merc has moved to every second Wednesday, instead of every second Tuesday.)

The story mentions a few local players in plug-in hybrid area, but focuses mainly on CalCars, a non-profit in Palo Alto. There, founder Felix Kramer says it's time to start a real business -- and will be approaching venture capitalists. And with oil prices hitting new highs, VCs like Palo Alto's Marty Lagod will be eager to look over the business plan.

By the way, the CalCars site is a good resource of information, as they've been pretty open so far. As usual, we didn't have space in the "dead-tree" edition to explore many other issues, such as the debate among environmentalists about whether refueling a car on the electric grid is really such a good thing (the grid relies partly on dirty coal), and the cost of producing ethanol, and of transporting it, and so on. There are many such challenges. (We'll note, though, than on the question of the dirty grid, most environmentalists concede that it is at least cleaner than burning gasoline, and getting even cleaner over time). We also didn't get room to discuss the nuances of Kramer's strategy, which includes selling to large municipal and corporate fleets.

...In other cleantech news, local venture capitalist Erik Straser, of Mohr Davidow Ventures, continues to prove he's the cleantech stud du jour (see here and here), this time leading a $16.5 million investment in Energy Innovations, which is developing a rooftop photovoltaic solar "concentrator" system, basically using mirrors to track sunlight and concentrate it for the photovoltaic process, and therefore allows more bang for the buck. We talked with President Andrew Beebe, who says the process could half the price of solar currently. He adds that it is a year away from shipping.

But it's one more sign that the sector is...

...heating up. "The thing that's fascinating for us, is finally the whole arena is getting the attention it deserves," he said, echoing comments by other solar executives about how much easier it is to raise money now. True, Energy Innovations may be competing for large rooftops, similar to the ones Nanosolar is going after. So why would Mohr Davidow invest in both start-ups? Well, Beebe didn't really want to go into the competition question, but did say each product had advantages and disadvantages when serving specific shapes and slants of roofs.

There are also signs that limited partners are getting fired up over the sector. We already mentioned Blackwolf Partners, which is raising money partly to invest in cleantech. (They mentioned to us that some LPs had expressed interest in funds that are even more focused than just having it as part of a portfolio approach). Then there's the cleantech fund DFJ is apparently raising, called AltaTerra.

Meanwhile, Deloitte & Touche and the NVCA released a study today that showed one of the areas venture capitalists plan to increase investments in the most is cleantech and the environment.

Some related links:
--NYT also writes about the VC interest in cleantech. Note the reference to Ira Ehrenpreis of Technology Partners. Btw, Ehrenpreis told us recently that his fund used to have two investment areas, IT and healthcare. Now it is cleantech and healthcare. Also significant.
--VentureWire story (reg required) on Energy Innovations.

Finally, check out this tour-de-force, in favor of plug-in, from none other than George P.Shultz, former Secretary of State, and R. James Woolsey, former Director of Central Intelligence:

...a single well-designed attack could send oil to well over $100/barrel and devastate the world's economy. That reality, among other risks, and the fact that our current transportation infrastructure is locked in to oil, should be sufficient to convince any objective observer that oil dependence today creates serious and pressing dangers for the US and other oil-importing nations.



Comments

Here's one clarification about Matt Marshall's original story in the Mercury News. The appeal of the Prius conversions that EDrive Systems (http://www.edrivesystems.com) will offer in 2006 could easily exceed initial estimates.

Especially in the past few weeks, as the awareness and excitement about plug-in hybrids has continued to grow, many people from around the country and the world have been contacting CalCars. Many are not celebrities or entrepreneurs. And they're saying they'd give almost anything to get the cleanest unlimited range vehicle on the planet. They're comparing the EDrive Priuses with well-engineered luxury cars that cost far more but don't have this advanced technology -- and they know what they'd choose.

Felix Kramer on June 26, 2005 9:31 PM
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