“Venture Capital in - EcoMachines Venturesecomachinesventures.com › sites › default › files...

“Venture Capital in Energy and Cleantech: Is The Model Keeping

Up?

&

UK

Continental

Europe

Rest of the

world

Research

Consulting

Finance

Project mgt

Engineering

Education

Other

Location Function

Oil & Gaz

UtilitiesNuclear

Renewables

Other

Industry

0

500

1000


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


Power Generation Transport Water

Energy Efficiency Materials Smart City

Sectors of InterestEcoMachines focuses on innovations in the following areas:

Waste

Industrials


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.


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


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


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


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


...yet within sub-sectors investment trends differ

Source: Cleantech Group i3 database


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) [email protected]

Oksana Hilinskaya (Investor Relations)Moscow, Russia(m) +7 964 566 8105(e) [email protected]

Alexey Krenke (Director) Prague, Czech Republic & Germany(m) +420 604 257 524(e) [email protected]

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


ETI - supporting preparation, delivering innovation Reducing costs

Creating investor confidence

Establishing new business modelsETI Members


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


ETI Delivery Partners


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


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)


‘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


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


Available Now


For more information about

the ETI visit www.eti.co.uk

For the latest ETI news and

announcements email

[email protected]

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”

http://www.whebgroup.com/about-us/people/sales-marketing/?id=270

http://www.whebgroup.com/about-us/people/sales-marketing/?id=270

http://www.google.co.uk/url?sa=i&source=images&cd=&cad=rja&docid=SHgRqxtQN_p0eM&tbnid=2xef7GN3NfwTcM:&ved=0CAgQjRw&url=http://www.theguardian.com/environment/2009/aug/27/obituary-edward-goldsmith&ei=OmEAU9zpCdGThge3zYGgCA&psig=AFQjCNEtf8rt4QZLjMBmyJfI8AGbiI3Wbw&ust=1392620218298021

http://www.google.co.uk/url?sa=i&source=images&cd=&cad=rja&docid=SHgRqxtQN_p0eM&tbnid=2xef7GN3NfwTcM:&ved=0CAgQjRw&url=http://www.theguardian.com/environment/2009/aug/27/obituary-edward-goldsmith&ei=OmEAU9zpCdGThge3zYGgCA&psig=AFQjCNEtf8rt4QZLjMBmyJfI8AGbiI3Wbw&ust=1392620218298021

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

Google

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

[email protected]

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.

[email protected]

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 [email protected]

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