Session de remue-m�ninges by R0p7u6K

VIEWS: 3 PAGES: 33

									Investing In Our Energy Future

- A North American Perspective -


                  European Energy
                  Venture Fair 2002



                        Joseph Baladi
                   Hydro-Québec CapiTech
                   Zurich, October 25, 2002
             INVESTING IN OUR ENERGY FUTURE
                      A North America Perspective




                                      Venture capital 2000




2012-09-13
                                    Venture capital 2002




 2
                                 A North America Perspective   Presentation Outline
INVESTING IN OUR ENERGY FUTURE




                                                                  Overview of CapiTech
                                                                  Driving Forces
                                                                  The Energy VC Environment
                                                                  Public and Private Markets' Challenges
                                                                  Mood & Conclusions




                                                                                 2012-09-13                 3
                                 A North America Perspective   This is Hydro-Québec CapiTech
INVESTING IN OUR ENERGY FUTURE




                                                                  Founded in 1998, CapiTech is Hydro-Québec
                                                                   venture capital unit
                                                                  Focused on energy technology investments strategic
                                                                   to Hydro-Québec business segments
                                                                  More than 275 million Euro under management
                                                                      Direct investments in 32 companies (2 public)
                                                                      Investments in 4 venture capital funds
                                                                  Structured as a wholly owned subsidiary of Hydro-
                                                                   Québec with an independent Board of directors
                                                                  12 investment professionals with offices in Montreal

                                                                                         2012-09-13                       4
                                 A North America Perspective   CapiTech Portfolio
INVESTING IN OUR ENERGY FUTURE



                                                                               Fund I           Fund II      Innovation Fund          IndusTech

                                                                Fund size     60 M Euro        105 M Euro          12 M Euro           100 M Euro


                                                                Timing        December         December            Early 1999         January 2001
                                                                                1998             2000
                                                                Investment    Equity investments in North     Equity investments in   Equity
                                                                               American early to growth-       Canadian seed to       investments in
                                                                Focus        stage companies and Fund of     early-stage companies    spin-offs from
                                                                                         Funds                                        HQ labs
                                                                Investment   Fully invested   $0,5 to 5      $0.1 to 1 million Euro   $30 million
                                                                             or committed     million Euro                            Euro+
                                                                Size

                                                                Portfolio    13               13 companies   9 companies              2 companies
                                                                             companies        and 1 Fund
                                                                             and 3 Funds




                                                                                          2012-09-13                                                   5
             INVESTING IN OUR ENERGY FUTURE
                             A North America Perspective




2012-09-13
                         Driving Forces…
                    A Power Industry In Transition




 6
                                 A North America Perspective   Restructuring Of The Electric Power Industry
INVESTING IN OUR ENERGY FUTURE


                                                                                                  Investment Thesis

                                                                                              • Majority of C&I load will
                                                                                              be competitive by ~2010
                                                                                              • Utility initiatives are ROI-
                                                                                              driven, not “deregulation”
                                                                                              driven
                                                                                              • Opportunities exist in all
                                                                                              parts of new horizontal
                                                                                              structure
                                                                                              • Customers aware of
                                                                                              energy as a solvable
                                                                                              problem, barriers being
                                                                                              eliminated, solutions
                                                                                              improving

                                                                                              Deregulation on average
                                                                                              forward, but at a slower
                                                                                              pace




                                                                               2012-09-13                                      7
                                 A North America Perspective   Emerging Transmission Gridlock
INVESTING IN OUR ENERGY FUTURE



                                                                                                                                                    Investment Thesis

                                                                                                                                                   • Local & regional
                                                                                                                                                   capacity crises are
                                                                                                              Growth rate, %
                                                                                          Generation          Transmission              Demand
                                                                                                                                                   looming, extent
                                                                                                                                                   differs by region
                                                                Eastern                        4,9%                 11,7%                 27,6%    • NIMBY/BANANA
                                                                Interconnection                                                                    will continue to stifle
                                                                                                                                                   construction
                                                                Ercot                         16,5%                  4,5%                 16,8%
                                                                Interconnection
                                                                                                                                                   • Unclear regulatory
                                                                                                                                                   rules will impede
                                                                Western                       17,8%                  2,7%                 20,1%    large investments for
                                                                Interconnection                                                                    years

                                                               Source: North American Electric Reliability Council, October 2000 & Tractionworks   Maximizing grid
                                                                                                                                                   throughput will be
                                                                                                                                                   key to utility asset
                                                                                                                                                   optimization




                                                                                                            2012-09-13                                                       8
                                 A North America Perspective   Environmentalism
INVESTING IN OUR ENERGY FUTURE


                                                                                                                                                                    Investment Thesis
                                                                                              Sources of energy supply worldwide
                                                                                                                                                                  • Valuations and returns
                                                                                      0,1
                                                                            Other      0,6                                                                        are most important, and
                                                                    Hydroelectric         1,8
                                                                                          2
                                                                                                                                                                  must be the objectives
                                                                                          1
                                                                                                                                                                  • Power will need to be
                                                                          Nuclear                 7                                                               cleaner as it gets closer
                                                               Renewables, Wate                            11
                                                                                                           11                                                     to the user
                                                                      Natural Gas                               16                                                • Trading of renewable
                                                                                                                          21
                                                                                                                                                                  energy will generate real
                                                                                                                                    25
                                                                              Coal                                             23                                 money
                                                                                Oil                                                           35
                                                                                                                                                        45        • States/Provinces far
                                                                                                                                                                  ahead of Federal
                                                                                      0               10             20                  30        40        50   policies
                                                                                                                               %
                                                                                                                      1973          1999
                                                                                                                                                                  Environmentalism
                                                                                                                                                                  means investing for
                                                                                                                                                                  returns not for social
                                                                Source: TIME Magazine, "Green Century – State of the Planet"                                      benefits



                                                                                                                     2012-09-13                                                               9
                                 A North America Perspective   "New Economy Demand"
INVESTING IN OUR ENERGY FUTURE


                                                                  The terror of terabytes                                Investment Thesis
                                                                         93% of new information born digital
                                                                         Five to six-9's power is becoming a           • Digital power
                                                                          standard (off-spec. 30 seconds/year)          requirements will
                                                                                                                        continue to grow in C&I
                                                                                                                        sectors
                                                               Billion                                                  • Power quality will be
                                                                   60                                                   solved at device level
                                                                                                                        • Esoteric issues such
                                                                   50                                                   as harmonics remain
                                                                   40                                                   niche opportunities
                                                                   30
                                                                                                            Gigabytes   Utilities will take
                                                                   20                                                   responsibility for
                                                                   10                                                   power reliability
                                                                                                                        cleanup
                                                                   0
                                                                   1993        2000    2002   2004
                                                                   Source: Accenture




                                                                                               2012-09-13                                         10
                                 A North America Perspective   Distributed Resources Requirements
INVESTING IN OUR ENERGY FUTURE



                                                                                                                                                        Investment Thesis

                                                                                                                                                    • Central plant model
                                                                                                                                                    no longer practical
                                                               Central Plant         Step-Up                                                        • Global
                                                                                   Transformer
                                                                                                                                                    communications will
                                                                                                                                                    create increasing need
                                                                                                                                                    for distributed power
                                                                                 Distribution Gas
                                                                                                      Receiving    Distribution                     • Near-term off-grid
                                                                                 Substation Turbine   Station      Substation          Recip
                                                                                                                                       Engine
                                                                                                                                                    investment will be in
                                                                Micro-                                  Distribution                                remote infrastructure
                                                                turbine                                 Substation                                  • Small scale DG
                                                                                          Recip                          Fuel          Commercial   growth tied to the state
                                                                       Photo              Engine                          cell                      of the economy
                                                                      voltaics


                                                                    Batteries                                                            Flywheel   The market structure
                                                                                                                                                    of the energy
                                                                    Fuel Cells                                                   Commercial
                                                                                 Residential              Gas Turbine                               industry still has not
                                                                                                            Industrial
                                                                                                                                                    changed to better
                                                                                                                                                    adopt DR




                                                                                                             2012-09-13                                                        11
                                 A North America Perspective   Timeline For Value Creating Technologies
INVESTING IN OUR ENERGY FUTURE




                                                                                                       - Flow Batteries       - AC/AC               - Stationary PEM   -   Electric
                                                                                                       - Clean Coal             Transformers          Fuel Cells           Vehicles
                                                                                                                              - Superconductivity   - Hydrogen
                                                                                              2010


                                                                                                                              - Intelligent Grids     Storage
                                                                 Commercialization Timeline




                                                                                                                              - Multi Services      - PLC
                                                                                                                                Underground
                                                                                                                                Cables
                                                                                                       - CO2 Trading          - Digital EIN         - Thermal          -   Hybrid
                                                                                                       - Green Taxes          - Automation (e.g.,     Storage              Vehicles
                                                                                              2005




                                                                                                       - SOFC, MCFC             HV Power            - EMN
                                                                                                         Fuel Cells             Electronics)


                                                                                                       - Small Scale DG       -   Wireless AMR      - Wireless AMR
                                                                                              2000




                                                                                                       - Flywheels                                  - Demand
                                                                                                                                                      Response



                                                                                                           Generation             T&D Networks      Retail / Premise         Mobility

                                                                                                     Source: Hydro-Québec Technology Roadmap


                                                                                                                                  2012-09-13                                            12
                                 A North America Perspective
INVESTING IN OUR ENERGY FUTURE




                                                               The Energy VC Environment
                                                               Investment Marches On … At A Slower Pace




                                                                            2012-09-13                    13
                                 A North America Perspective   Corrections and Over-Corrections
INVESTING IN OUR ENERGY FUTURE




                                                                Inception                            Company Development                                Maturity



                                                                    Technology Development                  Product Development           Market Development

                                                               “Textbook” Funding Continuum

                                                                         Seed and R&D Funding:
                                                                                                                      Venture Capital Funding          IPO
                                                                   Government, Angels, Universities, etc.


                                                               “Irrational Exuberance” Funding Continuum:

                                                               Seed Funding         Venture Capital Funding                             IPO


                                                               Over-Correction Funding Continuum:
                                                                         Seed and R&D Funding:
                                                                   Government, Angels, Universities, etc.            ?       Venture Capital Funding         IPO?




                                                                                                     2012-09-13                                                     14
                                 A North America Perspective   Energy Technology Venture Investment
INVESTING IN OUR ENERGY FUTURE



                                                                                                             $1 000                                                                                           Technology Stocks Meltdown

                                                                                                              $900                            IPO Market Euphoria
                                                               Annual Venture Capital Investment, Millions




                                                                                                              $800
                                                                                                                                                                                                                  Est. 2002
                                                                                                              $700
                                                                                                                                    Retail Competition Begins in California
                                                                                                                                                March 1998
                                                                                                              $600
                                                                                                                                              Kyoto Climate Summit                                                  Q3 2002
                                                                                                              $500                               December 1997

                                                                                                              $400            Retail Competition Authorized in California
                                                                                                                                          November 1996
                                                                                                              $300
                                                                                                                               CPUC Initiates Utility Restructuring in
                                                                                                              $200                          California
                                                                                                                                          December 1994
                                                                                                              $100

                                                                                                                $0
                                                                                                                      1980


                                                                                                                             1982


                                                                                                                                       1984


                                                                                                                                                1986


                                                                                                                                                       1988


                                                                                                                                                                 1990


                                                                                                                                                                        1992


                                                                                                                                                                               1994


                                                                                                                                                                                      1996


                                                                                                                                                                                             1998


                                                                                                                                                                                                    2000


                                                                                                                                                                                                           2002


                                                                                                                                                                                                                  2005


                                                                                                                                                                                                                         2007


                                                                                                                                                                                                                                2009
                                                                                                                Source: Nth Power, Venture Economics and Hydro-Québec CapiTech



                                                                                                                                                              2012-09-13                                                               15
                                 A North America Perspective   Energy Venture Investment 2001 Breakout
INVESTING IN OUR ENERGY FUTURE



                                                                                       Outsourcing
                                                                                         & Other           T&D
                                                                                           2%          Optimization
                                                                                                           13%
                                                                                                                  Energy
                                                                                                                  Storage
                                                                                                                    1%




                                                                  Communications,                                      Distributed
                                                                    Control & IT                                       generation
                                                                       47%                                                23%


                                                                                                                      Renewables
                                                                                                                         2%

                                                                                                                     Electro
                                                                                                       Enabling   Technologies
                                                                                                     Technologies      1%
                                                                                                         11%




                                                                                    2012-09-13                                       16
                                 A North America Perspective   VC Community
INVESTING IN OUR ENERGY FUTURE



                                                                  Corporate investors
                                                                      From about 35, down to a dozen active corporate investors
                                                                       in the energy technology space
                                                                      GE pulling the plug on GE Equity
                                                                  Private investors
                                                                      Angels investors, quieter
                                                                      50 Private VC Funds including half a dozen of new entrants
                                                                      Investment bankers abandoning the space
                                                                  20 Funds in 14 States with 10 B Euro focused on
                                                                   Clean Energy
                                                                  Organizers of Energy Fairs and deal-flow networks



                                                                                        2012-09-13                                  17
INVESTING IN OUR ENERGY FUTURE
                                 A North America Perspective                 Environment
                                                               The Energy VC Environment

                                                                     Current                              Impact                      What Is Done
                                                                     Current                           Impact on                     What We Are
                                                                     Status
                                                                      Status                           EnerTech                        Doing

                                                               • Poor state of the              • Investment bankers &         • Fine tuned investment focus
                                                                 economy                          strategic investors               • Strong ROI proposition;
                                                                                                  “sidelined”                         capex & opex reductions
                                                               • Focus on core business
                                                                                                     • Lesser competition           • Enhancing deployed DG
                                                               • CAPEX reduced to a                  • Co-investment                  assets
                                                                 trickle                             • Exit options                 • Not just “info
                                                                                                • Longer sales/adoption               management” but “info &
                                                                     Customers?                                                      control”
                                                                                                  cycles for portfolio
                                                               • Lower R&D                        companies                    • Continued Focus
                                                                 expenditures
                                                                                                • LT quality of deal flow at        • Increased scrutiny on
                                                                       $2,8 B Euro in 1991       risk                                investments where
                                                                        down to 1,5 B Euro in                                         utilities are sole customer
                                                                        2001                                                        • Favor product suites that
                                                                                                                                      have varied market
                                                                                                                                      drivers


                                                                                                    2012-09-13                                                  18
                                 A North America Perspective
INVESTING IN OUR ENERGY FUTURE




                                                               Challenges In Public and Private Markets

                                                               No One Has Repealed The Business Cycle …




                                                                               2012-09-13                 19
                                 A North America Perspective   The Inevitable Business Cycle ...
INVESTING IN OUR ENERGY FUTURE




                                                               "In times of great commercial prosperity there
                                                               has been a tendency [toward] over-speculation
                                                               on several occasions [after that]. The success
                                                               of one project generally produces others of a
                                                               similar kind. Popular imitativeness will … drag
                                                               a community too anxious for profits into an
                                                               abyss …"


                                                                           Charles Mackay - 1841


                                                                                2012-09-13                       20
                                 A North America Perspective   Illiquidity
INVESTING IN OUR ENERGY FUTURE

                                                                                                                                    IPO markets are quiet now
                                                               Public Markets
                                                                                                                           75      75       77
                                                                                                                                                                      71
                                                                                                                                                         69
                                                                                                                    $10

                                                                                                                                                                                                                                                     60
                                                                                                                     $8                    $7,4      $7,4
                                                                                                                                                              42     $6,7
                                                                                                                     $6            $5,3                                                                                                              40
                                                                                                                           $5,3

                                                                                                                     $4                                       $3,3
                                                                                                                                                                                              18
                                                                                                                                                                                                                                                     20

                                                                                                                     $2                                                                                                          8             7
                                                                                                                                                                                                          5         4      4            4
                                                                                                                                                                            $1,5
                                                                                                                                                                                                         $0,5    $0,3    $0,2   $0,8          $0,6
                                                                                                                     $0                                                                                                                $0,3          0

                                                                                                                           2Q99   3Q99     4Q99     1Q00      2Q00   3Q00   4Q00                         1Q01    2Q01    3Q01   4Q01   1Q02   2Q02


                                                                                                                                             Amount Raised ($B)                                                 Venture-Backed IPOs




                                                                             M&A activity on the decline                                                                                  Markets require more maturity – Déjà IPO?
                                                                                                                   448

                                                               $120                                                               378                                                                    10
                                                                                                                                                              400




                                                                                                                                                                             Median Age at IPO (Years)
                                                                                                                                                                                                         9
                                                                                                       302
                                                                $90                                                                                           300
                                                                                                244                                                                                                      8
                                                                                      217
                                                                             188                                                                                                                         7
                                                                $60                                                                                159        200
                                                                      154                                          $101
                                                                                                                                                                                                         6
                                                                $30                                                                                           100                                        5
                                                                                                        $43
                                                                              $26                                                 $21             $3,8
                                                                      $10              $12      $15                                                                                                      4
                                                                 $0                                                                                           0
                                                                      1995    1996     1997     1998    1999        2000          2001            1H02                                                   3
                                                                                                                                                                                                          1980          1982     1984       1986     1988   1990   1992   1994   1996   1998   2000   2002
                                                                             Amount Paid ($B)                Number of Transactions




                                                                                                                                          Source: Venture One



                                                                                                                                  2012-09-13                                                                                                                                                      21
                                 A North America Perspective   Free Fall
INVESTING IN OUR ENERGY FUTURE


                                                               Public Markets



                                                                                                       The Market Reality




                                                                                             Source: Venture Economics

                                                                                             PVCI = Post Venture Capital Index




                                                                                2012-09-13                                       22
                                 A North America Perspective   Public Markets Environment
INVESTING IN OUR ENERGY FUTURE




                                                                     Current                      Impact                What Is Done
                                                                     Status

                                                                                          • Greater access to   • Fund greater portion of
                                                               • Stock indices trending
                                                                                            experienced           company’s lifecycle  greater
                                                                 downward
                                                                                            management talent     reserve
                                                               • Companies trading
                                                                                          • Consolidation       • “Target” exit no longer IPO  LBO
                                                                 below their cash value
                                                                                            opportunities          Cash flow positive
                                                               • Minimal IPOs
                                                                                          • Valuations down     • Larger, diverse investor
                                                                     • Volume down                                syndicates
                                                                     • Valuations down    • Exit options
                                                                                            challenging         • Increased risk management 
                                                               • M&A activity lower                               longer due diligence cycles

                                                                     • Valuations down                          • Increased effort to “engineer”
                                                                                                                  exits

                                                                                                                • Flattened our “investment bell
                                                                                                                  curve”




                                                                                             2012-09-13                                            23
                                                                                                                                                        23
INVESTING IN OUR ENERGY FUTURE
                                 A North America Perspective                  Environment
                                                               2002 Slower Investing Pace
                                                               Private Markets

                                                                                         — Equity into Venture-Backed Companies—
                                                                                                                               6046
                                                                                                                                                            6 000


                                                               $100                                                   4501                                  5 000


                                                                                                                                                            4 000
                                                                $75
                                                                                                                                            2985
                                                                                                           2502                                             3 000
                                                                                               2169
                                                                $50                   1898                                     $93,2
                                                                                                                                                            2 000
                                                                         1313
                                                                                                                                                    1059
                                                                $25                                                    $49,0
                                                                                                                                                            1 000
                                                                                                                                         $34,1
                                                                                                $12,8         $17,7
                                                                          $6,8        $9,9                                                          $10,5
                                                                 $0                                                                                         0
                                                                          1995        1996       1997         1998     1999    2000       2001      1H02

                                                                                         Amount Invested ($B)                     Number of Deals

                                                                 Source: VentureOne




                                                                                                        2012-09-13                                              24
                                                                                                                                                                     24
INVESTING IN OUR ENERGY FUTURE
                                 A North America Perspective                  Environment
                                                               Corporate Investing Declining
                                                               Private Markets


                                                                                 — Corporate Equity into Venture-Backed Companies—
                                                                                                    129
                                                                                                              117                                                      125


                                                                $2 000                               $1 896
                                                                                                                    92                                                 100

                                                                                                          $1 559
                                                                $1 500                71                        $1 471
                                                                                             69                                                                        75
                                                                                                                          66

                                                                            46                                           $976    49
                                                                $1 000                $927   $905                                                                      50
                                                                                                                                         34
                                                                                                                                               25
                                                                 $500      $410                                                                     19     19          25
                                                                                                                                $259                             11
                                                                                                                                       $170   $106 $119   $114
                                                                                                                                                                 $42
                                                                    $0                                                                                                 0
                                                                           2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02
                                                                                 Amount Invested ($M)              Number of Deals

                                                                 Source: VentureOne




                                                                                                          2012-09-13                                                   25
                                                                                                                                                                            25
                                 A North America Perspective   Companies Raising More $ Before Going Public
INVESTING IN OUR ENERGY FUTURE


                                                               Private Markets

                                                                                — Median Amount Raised in Private Rounds Prior to IPO—
                                                               $50


                                                               $40


                                                               $30

                                                                                                                              $47,0      $48,2
                                                               $20
                                                                                                                     $31,3
                                                               $10                                           $21,0
                                                                                      $14,8     $13,0
                                                                          $10,3
                                                                $0
                                                                          1995        1996      1997         1998    1999     2000       2001


                                                                 Source: VentureOne




                                                                                                2012-09-13                                       26
                                                                                                                                                      26
                                 A North America Perspective   Series A Investments - Is a Reversal Key?
INVESTING IN OUR ENERGY FUTURE


                                                               Private Markets



                                                                    50%

                                                                    40%

                                                                    30%

                                                                    20%

                                                                    10%

                                                                      0%         1998- 1998- 1998- 1998- 1999- 1999- 1999- 1999- 2000- 2000- 2000- 2000- 2001- 2001- 2001- 2001- 2002- 2002-
                                                                                   1     2     3     4     1     2     3     4     1     2     3     4     1     2     3     4     1     2
                                                                    % of $       40%   37%   36%   40%   35%   33%   31%   34%   30%   29%   23%   24%   22%   15%   14%   15%   20%   21%
                                                                    % of Deals   42%   40%   38%   39%   37%   40%   43%   46%   42%   42%   39%   35%   27%   23%   23%   22%   24%   25%




                                                                             Source: PricewaterhouseCoopers/Venture Economics/National Venture Capital Association MoneyTree™



                                                                                                             2012-09-13                                                                        27
                                 A North America Perspective   Pre-money valuation at Mid-Ninety Levels
INVESTING IN OUR ENERGY FUTURE


                                                               Private Markets

                                                                                         Median Pre-Money Valuations

                                                                             30
                                                                                                                          25
                                                                             25
                                                                                                          21
                                                                             20
                                                                                            15,6
                                                                     M$ US




                                                                                                                                  16,7
                                                                             15    13

                                                                             10                                                            10,6

                                                                              5

                                                                              0
                                                                                  1997      1998        1999             2000   2001     1H02

                                                                                                    Source: VentureOne




                                                                                                   2012-09-13                                     28
                                 A North America Perspective   Negative Returns
INVESTING IN OUR ENERGY FUTURE


                                                               Private Markets


                                                                                        Average VC Vintage Year Returns (IRR) as of June 30, 2002
                                                                   100
                                                                                                                            85,9
                                                                    80

                                                                                                                   58,1             58,8
                                                                    60

                                                                                                 39,4     41,4
                                                                    40
                                                                          27,6           27,7                                              25,2
                                                                                 18,8
                                                                    20

                                                                      0

                                                                    -20                                                                           -13,5   -17,8
                                                                                                                                                                  -23,5
                                                                    -40
                                                                          1990   1991   1992    1993    1994      1995     1996     1997   1998   1999    2000    2001




                                                                                                        Source: Venture Economics




                                                                                                   2012-09-13                                                         29
                                 A North America Perspective   Private Markets
INVESTING IN OUR ENERGY FUTURE




                                                                     Current
                                                                      Current               Impact on                What We Are
                                                                     Status                    Impact
                                                                                            EnerTech                  What Is Done
                                                                                                                       Doing
                                                                      Status


                                                               • Total $ amount and   • Valuations down         • Prepared to invest more
                                                                 number of                                        $ per company 
                                                                 investments               -Initial               increased reserves
                                                                 declining                 -Follow-on’s
                                                                                                                • Protective provisions;
                                                               • More $ required      • Returns down              “pay to play” for follow-
                                                                 prior to exit                                    on rounds
                                                                                      • Tough to find co-
                                                                                                                • Longer time to close
                                                                                        investors; especially
                                                                                                                  transaction
                                                                                        for follow-on’s
                                                                                                                • Support strong
                                                                                                                  companies with
                                                                                                                  distressed investors

                                                                                                                • Additional resources
                                                                                                                  and time allocated to
                                                                                                                  portfolio companies
                                                                                         2012-09-13                                           30
                                                                                                                                                   30
                                 A North America Perspective   The Mood
INVESTING IN OUR ENERGY FUTURE




                                                                                                              Today and for the
                                                                                           January 2000
                                                                                                             foreseeable future
                                                                                           Nearly zero:       Nearly infinite:
                                                                     Cost of Capital    raise as much as   make the most of what
                                                                                           you can get          you’ve got
                                                                                                             Profits and cash
                                                                                          Growth, brand
                                                                  Wall Street Values                        Bar for funding has
                                                                                            and share
                                                                                                                  gone up

                                                                   CAPEX & OPEX                Loose          Tight (airtight)


                                                                        VC Markets        Anything goes        Life sciences

                                                                                                              Conserve cash
                                                                           Strategy         Burn cash
                                                                                                                 SWAT




                                                                                       2012-09-13                                  31
                                 A North America Perspective   Conclusions
INVESTING IN OUR ENERGY FUTURE




                                                                                Broader mix of stage in portfolio
                                                                 Sourcing       Look for bargains
                                                                                Explore companies with tired investors


                                                                                Apply same criteria to new & existing opportunities
                                                                                Facilitate consolidations
                                                                 Investing      Pay attention to co-investor “staying power”
                                                                                Alignment of investors/management: Burn Rate, Market Timing, etc.

                                                                                Tremendous pressure on “non-participating” investors
                                                                                Smaller independent boards, act swiftly
                                                                 Managing       Focus on business development and financing (increase reserves)
                                                                                Look forward not backward

                                                                              Work to build network
                                                                                     Potential corporate buyers
                                                                  Exiting            Buy-out firms
                                                                              Seriously consider all liquidity opportunities




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                                 A North America Perspective   Acknowledgments
INVESTING IN OUR ENERGY FUTURE



                                                                  This presentation would not have been possible
                                                                   without sharing the intelligence and recent
                                                                   experience of our partners




                                                                                    2012-09-13                      33

								
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