Post on 09-Jun-2020
“Venture Capital in Energy and Cleantech: Is The Model Keeping
Up?
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©2013 EcoMachines Incubator Ltd. All rights reserved
©2013 EcoMachines Incubator Ltd. All rights reserved
We invest in and accelerate the growth
of promising startups in high-value manufacturing and advanced engineering
We address the funding gap faced by
early-stagecompanies that are
working in these areas
Investments are made as part of an
Accelerator which includes equity finance, mentorship, and other
services
About EcoMachines Incubator
©2013 EcoMachines Incubator Ltd. All rights reserved
Power Generation Transport Water
Energy Efficiency Materials Smart City
Sectors of InterestEcoMachines focuses on innovations in the following areas:
Waste
Industrials
©2013 EcoMachines Incubator Ltd. All rights reserved
Accelerator ProgrammeWe help entrepreneurs to transform their business from a startup with a proof-of-concept technology into a high-growth, investable company.
Stage 1Startup
Stage 3Follow On
Result
Our 9-month Accelerator programme is specifically designed for hardware & advanced engineering startups.
©2013 EcoMachines Incubator Ltd. All rights reserved
Management Team
CEO and FounderIlian Iliev
Founder DirectorOleg Evdokimenko
DirectorAlexey Krenke
Investment Relations
Oksana HilinskayaAnalyst
Robert Snellgrove
Peter FeulnerLeader of Technology, Innovation and Strategy at Ricardo Germany
Igor TurevskyEx-Global Sales and Busdev Director of Alstom Network Management
Laurence JohnVC and investor; ex-CEO of Amadeus Capital’s Seed Funds
Prof. Nelson PhilipsChair in Strategy and Organisational Behaviour at the Imperial College Business School
Advisory Panel
©2013 EcoMachines Incubator Ltd. All rights reserved
Mentors
Former head of intellectual property at BP; Founder and owner of Fairoaks IP
Mike BarlowCo-founder and President, Operations at Owlstone Nanotech
Billy BoyleFounder and Non-Executive Director of Brady plc
Robert BradyManaging Director, Sustainable Blueprints; Ex-Head of Water Insight Services, BNEF
Dimitra ChristakouCEO of Puntios, which creates and finances technology spin-outs from industry.
Simon Hombersley
Energy Policy Advisor , Energy Technologies Institute (ETI)
Mahdi KazemzadehEuropean Patent Attorney, Partner at Mathys & Squire
Alan MacDougallDirector at Fidem Partners
Hristo MitchkovskiChairman of Cambridge Cleantech
Hugh ParnellBusiness change and growth leader
Sir Eric Peacock
Founder Director atProductiv; Chairman at Oxford BioMedica
Nick RodgersManaging Partner and Co-Founder of White Lake Strategic Advisory Group
John Rowland
©2013 EcoMachines Incubator Ltd. All rights reserved
Why are we bullish on the opportunities in
energy & cleantech?
Source: http://www.ritholtz.com/blog/wp-content/uploads/2009/07/cartoon-spin-bull-vs-bear.jpg
©2013 EcoMachines Incubator Ltd. All rights reserved
VC in energy and cleantech: is the model keeping up?
The VC environment has been broadly
positive in the last few years
...while cleantech investment has
moved in the opposite direction
©2013 EcoMachines Incubator Ltd. All rights reserved
...yet within sub-sectors investment trends differ
Source: Cleantech Group i3 database
©2013 EcoMachines Incubator Ltd. All rights reserved
Why are we bullish about hardware in
energy and cleantech?
• The ‘bubble’ in Cleantech has already burst – look elsewhere for bubble conditions
• Move towards specific, real solutions for mature industrial sectors – with real bottom-line benefits to specific users/clients
• Much easier to have investment discussions firmly focused on real world outcomes – where real cash flows come from
Bubble inoculation ?
• Improved CAD design & simulation, 3D printing/rapid prototyping, and more executive experience can lead to leaner, faster startups
• Impact is lower capex and faster time-to-market
Lean hardware startups?
• Opportunities for energy/cleantech application areas from well developed platform technologies in materials science, robotics, M2M/Connected hardware
• The application of these to industrial problems can lead to significant value release/capture – and novel business models
Horizontal technologies
impact?
Ilian Iliev (CEO)London, United Kingdom (HQ)(m) +44 77863 73965(e) ilian.iliev@ecomachinesincubator.com
Oksana Hilinskaya (Investor Relations)Moscow, Russia(m) +7 964 566 8105(e) oksana.hilinskaya@ecomachinesincubator.com
Alexey Krenke (Director) Prague, Czech Republic & Germany(m) +420 604 257 524(e) alexey.krenke@ecomachinesincubator.com
Contact UsTo find out more about EcoMachines Incubator,
please contact us.
ECOMACHINES INCUBATOR LTD.Rainmaking Loft, International House, 1 St Katharine’s Way, London, E1W 1UN, United Kingdom
www.ecomachinesincubator.com @EcoMachinesUK
Dr. Dominic EmeryVP Long-Term PlanningBP Group
Venture capital in energy VC and corporate perspectives
Venture capital study:
• Start-ups backed by VC since 1970:
– employ 9% of US private sector
– accounts for 16.6% of US GDP
• Total VC investment 0.2% of GDP
VC and innovation:
• Venture capital investments have 3 times
higher innovation/patent output than R&D
Venturing - historically used by digital and biotech sectorsand increasingly now by energy, too
16
Sector Venture/Start-up Corporate investor
Electric vehicles Reva Mahindra & Mahindra
Concentred solar power Brightsource Alstom
Electric vehicles Tesla Toyota
Advanced biofuels Virent Shell/Cargill
Solar Stion TSMC
Advanced biofuels Amyris Total
Offshore wind A2Sea Siemens
Advanced biofuels Verenium BP
Energy Efficiency SynapseSense GE
Material/Solar Nanosys Samsung
Electric vehicles Bright Automotive GM
Solar Solarfun Hanwha Chemicals
Market trends: Rise of corporates in energy ventures Selected recent corporate cleantech investments
Some context - BP at a glance
employees
83,200 $23,5 bn
profitproved
reserves
17Bn boe
of oil refined
per day
1.8M bbls
of petchems
produced
in 2012
13.9M tns
sugar
cane
capacity
7.4M tns
2013 annual report
data
BP is one of the world's leading integrated oil and gas companies
How innovation in technology supports our business
Ensuring safe, reliable operations is our top priority
Focused at the point of competition in 15 major technology programmes
Leveraged investment through partnerships
Conversion
• Chemicals
process
technology
• Upgrading
refineries
Consumption
• Lubricants
• Advanced fuels
Low carbon
• Biofuels
18
Resource
extraction
• Subsurface
understanding
• Standardised
engineering
solutions
• Unconventional
hydrocarbons
Sunbury, UK
Bochum, Germany
Hull, UK
Pangbourne, UKNaperville, USA
San Diego, USA
Houston, USA
Examples of research partnerships : Academic institutions, strategic alliances,
JVs
Research and development
Seven major BP technology centres
Venturing operates in BP’s innovation ecosystem
M&A
Corporate venturing
Academicinstitutions
StrategicAlliances
& JVs
CORPORATEINNOVATION
Internal
R&D
Innovation through venturing
20
What?
■36 investments, c. $200m invested and committed
■First returns realised in 2011
How?
■Investing in early and growth-stage energy ventures
leveraging external resources
■ Incubating high-potential proprietary R&D from leading
universities
■ Using collaborative, complementary and critical business
creation skills
Who?
■7 venture professionals based in UK and US
■Network of world-class technical and energy market
expertise across BP
Our venturing journey to date
■2006
Biosciences and their
application to energy
(especially fuel)
■ By 2009
Investment entity:
Alternative Energy
Ventures created
■By 2011
Sourcing technologies
that complement BP’s
core skills as an oil and
gas company,
re-named BP Ventures
BP Ventures: Supporting Upstream Businesses
22
BP Ventures: Supporting Downstream Businesses
23
To sum up: the role of BP Ventures
…supporting innovation in science and technology which
is vital to meeting energy demand
…helping to build BP’s research and technology
interests – supporting business strategy.
…contributing to BP’s focused, open research
relationships, often multi-party and cross-discipline
©2014 Energy Technologies Institute LLP - Subject to notes on page 125
DRAFT
©2014 Energy Technologies Institute LLP The information in this document is the property of Energy Technologies Institute LLP and may not be copied or communicated to a third party, or used for any purpose other than that for which it is
supplied without the express written consent of Energy Technologies Institute LLP.
This information is given in good faith based upon the latest information available to Energy Technologies Institute LLP, no warranty or representation is given concerning such information, which must
not be taken as establishing any contractual or other commitment binding upon Energy Technologies Institute LLP or any of its subsidiary or associated companies.
ETI – Supporting industry growth by developing and
demonstrating affordable, secure energy technologies
Dr David Clarke FREng
©2014 Energy Technologies Institute LLP - Subject to notes on page 126
ETI - supporting preparation, delivering innovation Reducing costs
Creating investor confidence
Establishing new business modelsETI Members
©2014 Energy Technologies Institute LLP - Subject to notes on page 127
ETI headlines
24 projects
completed
1st
programme
associate -
Hitachi
2equity holdings –
supporting
business
developments
£210m
projects
announced
119partner
organisations
15 countries -
europe, north
america,
middle east,
asia
9commercial
product launches
52 projects across
the portfolio
£100m
Potential revenue
from existing
project portfolio
©2014 Energy Technologies Institute LLP - Subject to notes on page 128
ETI Delivery Partners
©2014 Energy Technologies Institute LLP - Subject to notes on page 129
When does ETI invest ?
Technology is of strategic importance to a
future low carbon UK energy system
Risk too high to support market investment
Additionality delivered through ETI
partnership (implies market failure)
ETI investment can move technology to the
point where market will provide further
support
• Cost reduction to ensure subsidies are not
a critical part of securing market investment
• Technology risk reduction through focused
development and demonstration
• Market risk reduction through dialogue with
regulators / policy groups
• Project finance, equity, loans as
appropriate
1s 10s 100s
Ideas / Proof
of concept
Technology
development
Technology
demonstration
Commercialisation
£m
ETI invests all along
the innovation chain –
primarily in very high
risk early stages …
… taking out risk to
encourage later stage
commercialisation
investors
©2014 Energy Technologies Institute LLP - Subject to notes on page 130
Fault Current LimiterIn supply from GridON with site test by UK Power Networks
£4m contract from ETI
On test at UK substation (Newhaven) from June 2013
Market and policy
environment
exists
Manufacturing
supply-chain
exists worldwide
Technology now
demonstrated
Requires
Business
development
capital (sales
and
marketing)
©2014 Energy Technologies Institute LLP - Subject to notes on page 131
‘Very long blade’ Next generation high performance wind turbine blade development
£15.5m contract from ETI with Blade Dynamics
In development for test from 2015
UK / US based entrepreneurial development team – small business
Technology and business development support from ETI - project
financing, equity investment
Market and policy environment exists
Requires
Technology development and demonstration
Local (small-scale) manufacturing facility investments
©2014 Energy Technologies Institute LLP - Subject to notes on page 132
Electricity storageSubstation scale electricity storage as heat
£15.5m contract from ETI with Isentropic and Western Power Distribution
In development for UK substation test in 2015
UK based entrepreneurial development team – small business
Technology and business development support from ETI -
project financing, equity investment
Requires
Technology
development
Market / Policy
development
Business
development
finance
©2014 Energy Technologies Institute LLP - Subject to notes on page 133
Available Now
©2014 Energy Technologies Institute LLP - Subject to notes on page 134
For more information about
the ETI visit www.eti.co.uk
For the latest ETI news and
announcements email
info@eti.co.uk
The ETI can also be
followed on Twitter at
twitter.com/the_ETI
Energy Technologies Institute
Holywell Building
Holywell Park
Loughborough
LE11 3UZ
For all general enquiries
telephone the ETI on 01509
202020.
Setting up a PE Business
focused on Resource Efficiency
Dr Rob Wylie
Co-Founder and Chairman WHEB
March 10 2014
I was a Chemist!
36
WHEB 1995 - 2002
37
Goldsmith Connection – Money and Environment
38
Sir James
The “financier”
Teddy
The “environmentalist”
Ben
“WHEB”
WHEB PE History
39
1995 until
20022002 until 2007 2007 onwards
1995 WHEB
Partnership
founded as an
environmental
corporate finance
and incubation
boutique by Rob
Wylie and Kim
Heyworth (hence
Wylie Heyworth
Environmental
Business = WHEB)
2002 Ben Goldsmith
joins the team and
WHEB Partnership
becomes WHEB
Ventures
Fund 1 (2004
vintage):
WHEB Ventures 1
2007 Shift from
venture to EU
growth capital
investment :
Focus on
growth capital
Open German
office
WHEB Ventures
renamed
WHEB Partners
2007: James McNaught-Davis joins as
Managing Partner
2008: Jörg Sperling joins to manage
German activity
2011: Kim Heyworth retires
Growth stage Investing
Fund 2 (2008 vintage):
Green Growth Fund 1
Fund 3 (2014 vintage):
Green Growth Fund 2
WHEB 2014
40
WHEBp
Sustainability focused multi-asset class investment firm covering Private Equity, Listed Equities and
Infrastructure (acquiring renewable energy assets).
Total AuM around €480m of which some €250m (£210m) across three VC/PE funds.
WHEB PE Funds
• Fund 1 (2004 vintage) – “WHEB Ventures”: £24 million; invested in 8 companies and closed for new
deals. Investors are nearly all family offices. Focused on venture stage.
Fund 2 (2008 vintage) – “Green Growth Fund 1”: £105.million; invested in 12 companies to date.
Investors are around 70% family offices and 30% institutions. Focused on growth stage.
Fund 3 (2014 vintage) – “Green Growth Fund 2”: first closing in Feb 2014 at €95m with eventual
target of €200m. Likely investor base 15% family offices, 85% institutions. Focused on growth
stage.
Location
2 offices (London, Munich).
Team Size
20 investment professionals across WHEB Group of which 8 plus 3 special advisors involved in
the PE funds.
Sources Venture Capital
41
Family Offices/HNWs
EIS/ECT/VCT
“tax driven”Corporates VC and PE
Endowments Para-State Project funding/ hybrid debt
Public/Institutional
Wide range
Evergreen ?
Typically sub £5m
Short/medium term
OCP
Octopus
Albion Ventures
Oxford Technology
Depends on corp.
Strategic timeframe
Tate & Lyle
Dow
Unilever
Siemens
BP
Typically up to £20m
5-7 years
Emerald (VC)
Aster Capital (VC)
MTI (VC)
WHEB (PE)
plus big PE players
Gates Foundation LCIF Silicon Valley Bank IP Group
PE Portfolio
42
Energy
generation
Energy
efficiency
& storage
Cleanindustrial processes
Waste Water
Industrial and Resource Efficiency
For PE/VC avoid over hyped, capital intensive, subsidy dependent businesses!
Focus on those offering short term economic returns to customers with clear market demand
Investment Criteria
43
growth stage i.e. profitable
strong and clear market drivers
legislative demands or replacement of banned products are great but
need “must have” not just “nice to have” products
not subsidy dependent for economic viability
low capital requirements
how mitigate through business model
“gorillas” do exist but are rare and multiple funding
rounds are a pain
strong IP
not just for protection, key is for exit
Investment Criteria (cont)
44
clear differentiation
important for winning partners and sales growth
important for exit
clear exit route
with whom?
when?
for how much?
scalable business model
licensing technology vs. prime developer/distributor
engagement with potential partners at early stage
45
Electric Vehicles
Headquartered in Starnberg near Munich, Germany
Develops and distributes an integrated drive system involving high torque,
very low weight electric outboard motors for boats
Has all the advantages and none of the disadvantages of other electric
vehicles
Very cool product!
Geothermal
46
Headquartered in Oslo with engineering and technology centre in Iceland
Delivers small scale, modular, turnkey, “well-head” geothermal power plants.
Significantly shortens the time to power online in a geothermal project, minimises well
redundancy, highly flexible and low cost per MW.
5MW well-head pilot plant delivered to first customer in Kenya and delivering at least 14
more plants to Kenya and negotiating first Indonesian contracts.
Cleantech Headlines - Whoops!
47
U.S. solar firm Solyndra
files for bankruptcy
protection
Startup SolFocus Lays Off
Staff, Looks For New
Owner
MiaSole Sold to China’s
Hanergy for $30 Million
Siemens Says Auf
Wiedersehen to Solar
Beleaguered battery
maker A123 Systems
finally files for
bankruptcy
Kleiner Perkins cools to
cleantech investing
“The top five VC firms no
longer admit they invest in
cleantech,” according to
Jigar Shah.
Exit
48
The Company
friedola TECH supplies tough, lightweight patented plastic components, for
automotive and logistic applications (used by Daimler, VW, others).
Products made from recycled materials derived at friedolaTECH‘s own
plastic waste recycling facilities.
Investment Thesis
Acquired 90% of the Company’s equity for an extremely low EBITDA
multiple.
Significant growth potential in new market segments, applications and
regions.
Extracting Value Through Pursuit of Growth
Revenues doubled and EBITDA tripled from 2009 to 2012.
WHEB brought in KPCB as co-investor and accelerated expansion in the USA by hiring US
staff and starting US production facility. WHEB also introduced the company to several blue
chip OEMs to grow the customer base.
Majority shareholding sold to US based PE fund SilverLake in 2012 letting WHEB return
roughly 2x cost to LPs plus retain minority shareholding.
Fund raising - LP Investor Trends
49
Institutional LPs averse to venture and focus on growth/buy out funds
LPs sceptical of cleantech theme after being burnt in renewable energy mania
Early stage investment being met by corporates, family offices/HNWs and tax
driven vehicles
Growth/buyout deals available at good valuations as bank debt funding is
scarce.
Secondary buyout by larger PE firms is a good alternative to corporate M&A as
an exit route
www.whebgroup.com
Contact
CONFIDENTIAL 50
London
2 Fitzhardinge Street
London W1H 6EE
United Kingdom
+44 (0)203 219 3441
info@whebgroup.com
Munich
Maximilianstraße 36
80539 München
Deutschland
+49 (89)122 2808 20
Contact
EcoMachines Incubator is an investment fund for advanced engineering and high-value manufacturing companies, with a particular emphasis on cleantech. It makes seed investments through its Accelerator programme, and also invests in later-stage companies raising larger rounds.
info@ecomachinesincubator.com
www.ecomachinesincubator.com
@EcoMachinesUK
The Cambridge Alumni Energy Society’s mission is to connect alumni with an active interest in the energy sector, enhance networking and help with sharing ideas, publications, and events. To join, please send an email with your current position, matriculation year, college, and degree title to antoine.huard@cantab.net