Cleantech Venture Capital Presentation by johnbabcock

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									Cleantech Venture Capital
Pepperdine University Graziadio School of Business and Management Toyota Motors USA Headquarters February 12, 2009

Prerequisite Cleantech Slides
Blue Marble Shot McKinsey Chart The CFL Polar Bear

Cleantech Markets Today
• • • • • Rustic Canyon Environmental issues Market opportunities Market challenges Examples

John Babcock
• Partner, Rustic Canyon Partners • Board Member
– Foodlink – Leads360 – Pentadyne – Serious Materials – SiliconSystems – Transonic Combustion

Rustic Canyon Partners
• • • • • Spun out of Times Mirror in 1999 $800MM under management Investing out of Rustic Canyon III 7 partners, 7 other professionals 2 offices
– Santa Monica – Silicon Valley

Yeah, right.

Is Climate Change real?

Are you sure?

Yes.
400 390 380 370 360 350 340 330 320 310

2 CO

levels are rising.

300
1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 CO2 measurements at Mauna Loa Observatory, Hawaii Source: National Oceanic & Atmospheric Administration

Yes. Temperatures are rising.

• Does the CO2 cause rising temperatures? Yes. • Does human activity cause the CO2? Yes. • Do other issues effect the temperatures? Yes. • Are all of the issues understood? No. • Is this “actionable intelligence”? Yes.

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

10000 BC 6500 BC 4000 BC 2000 BC 500 BC 200 BC 200 500 700 900 1100 1250 1340 1500

World Population

1650
1750 1850 1910 1930 1950 1970 1990 2010

The Tragedy of the Commons

Coal is really cheap

US Electricity Production
Billion kWh 4,500 4,000 3,500 3,000 2,500 2,000 Other Gases

Other Other Renewables
Hydroelectric Nuclear

1,500
1,000 Natural Gas Petroleum Coal

500
0 1996 1998 2000 2002 2004 2006

U.S. Electricity Production Costs
1995-2007, In 2007 cents per kilowatt-hour
2007
Coal - 2.47 Gas - 6.78 Nuclear - 1.76 Petroleum - 10.26 12.0 10.0 8.0 6.0 4.0 2.0 0.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Production Costs = Operations and Maintenance Costs + Fuel Costs Source: Global Energy Decisions Updated: 5/08

Energy growth > Population growth
Worldwide Electricity Consumption
4,500 4,000 3,500 3,000 Billion Kwh

United States
Europe China Japan South America Canada

2,500
2,000 1,500 1,000 500 0

China builds 2 coal plants a week

Overgrazed

Energy security is valued.

Why Cleantech now?
Enormous Markets Government Imperatives Cleantech Technology Advances Management Teams

Everybody in!
Cleantech VC
$9,000
$8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000

$0
2001 2002 2003 2004 2005 2006 2007 2008

Source: PriceWaterhouseCoopers Money Tree Report, January 2009

Cleantech definition
Cleantech is a term used to describe knowledge-based products or services that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy consumption, waste, or pollution. Its origin is the increased consumer, regulatory and industry interest in clean forms of energy generation— specifically, perhaps, the rise in awareness of global warming and the impact on the natural environment from the burning of fossil fuels. The term cleantech is often associated with venture capital funds.

Source: Wikipedia.com

Cleantech is diverse

Source: greentechmedia.com

VC has distinct sectors
• Software
– Traditional – SaaS

• Life sciences
– Device – Drug

• Hardware
– System – Fabless semiconductor

VC is formulaic.
• High gross margins:60% - 90% • Capital efficiency: $5 - 50MM • Creating new markets (often)

Cleantech doesn’t fit old VC formula
• Gross margins: 20% - 50% • Capital intensive: $50 - $250MM • Entering established markets (often)

Cleantech VC, 2008
$2,240 $3,300 Solar Biofuels Transportation Wind Smart Grid Agriculture Water Other

$148 $166 $345 $502 $795 $904

Amount Invested ($MM)
Source: Cleantech Group, LLC

The McKinsey Chart

Source: McKinsey & Co, “Reducing U.S. Greenhouse Gas Emissions: How Much at What Costs?”

The McKinsey Chart

Solar

Source: McKinsey & Co, “Reducing U.S. Greenhouse Gas Emissions: How Much at What Costs?”

The McKinsey Chart
Fulcrum Bioenergy

Transonic Combustion

Transonic Combustion

Serious Materials

Source: McKinsey & Co, “Reducing U.S. Greenhouse Gas Emissions: How Much at What Costs?”

U.S. Energy Demand

51% 27%

22%
Built Environment
Source: EIA, CalStar analysis

Transport

Industry

U.S. Energy Demand
Built Environment 51%
Residential 22% Commercial 17%

Operations

39%

Buildings 9%
Source: EIA, CalStar analysis

Infra 3%

Materials

12%

Embodied Energy To Build One House • 1 Billion BTU’s • 8,000 Gallons of gas • Drive around the world 6 times
Source: Deconstruction Institute

Saves more energy than any other window, period

Technology –
a gap in performance : the frame and spacer

Poorly insulated home

Well insulated, ‘high-performance’ home

The effect of the full frame degradation can be seen in the IR photographs.

• First/only Cleantech drywall replacement
– – – – Advanced material science Higher performance in every aspect Uses 80% recycled content (no gypsum) Hangs just like gypsum drywall

• Virtually zero energy in manufacturing
– No heaters, no dryers, no calcining, no CO2

• Plant has 97% less greenhouse gas emissions

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Replacing the old Industry

Gypsum Drywall Manufacturing
Volume: 1.3 Billion Panels/yr Energy: 200 Trillion BTU’s NG/yr CO2 Released: 20 Billion pounds/yr Process Invented: 1917

EcoRock Manufacturing
Volume: 1.3 Billion panels/yr

Energy: Zero BTU’s NG/yr
CO2 Released: Zero pounds/yr Process Invented: 2007
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Our Mission
We will enable dramatically higher fuel efficient passenger vehicles with our fuel injection systems. Near-term our technology operates on regular gasoline; long-term on renewable, zero-net carbon bio-fuels at an economical cost per mile.

Our Investors
Our investors include Venrock, Khosla Ventures and Rustic Canyon. Originally funded August 2006, the company is currently transitioning from R&D into product commercialization phase.

• Investors: Rustic Canyon and USRG • Converts Municipal Solid Waste to Ethanol • Has very large long term supply agreements

Questions?

THANK YOU.

Solar is expensive.


								
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