This presentation was given by Jeff Bocan as a part of the June 7th 2012 Michigan Energy Forum event on Cleantech Venture Funding.

1. Clean Technology Financing and
Venture Capital
Presented By:
Jeff Bocan, Beringea LLC

2. Beringea – Michigan's Largest VC Firm
Company Overview
• Headquartered in Farmington Hills, Mich., with an additional offices
in London
• 25+ years of investment experience
• 70+ portfolio companies, $400+ million under management
• Co-manager of the InvestMichigan! Growth Capital and Mezzanine
funds, amongst others
Investment Profile
• Target late/growth stage venture capital opportunities
• Generalist investors-- primarily focused on cleantech, health care, IT
and digital media sectors
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3. Growth Capital Fund
$185 million fund, co-managed by Beringea and Credit Suisse, dedicated to
growing the next generation of Michigan companies
Investment Profile
• Invests $2-10 million in companies with enterprise values <$200 million that are:
o Based in, or have substantial operations in the state of Michigan
o Typically have >$1 million of revenue
Targeted Sectors
• Growth-oriented businesses, led by talented managers, in a range of dynamic
sectors, including but not limited to:
o Clean technology
o Health care – devices, services, diagnostics
o Information technology
o Advanced materials/manufacturing
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4. Key Macro Dynamics for VC & Cleantech
• Legacy VC cleantech portfolio
o Relatively short – most influential activity since 2004
o Few winners, many losers
o VCs on Cleantech learning curve
o Very capital intensive businesses/sectors got backed first --
biofuels and solar – lots of investors got burned
o Long investment horizons
o New $ trending toward later-staged companies
o Many legacy VC-backed companies in the market for funding at all
times
o 90% of Cleantech deals in 2011 were follow-ons
o Regulatory Issues – complex, uncertain and inconsistent
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5. Key Macro Dynamics for VC & Cleantech
• New raw material challenges
o Rare earth elements
o Lithium deposits
• Macro- and socio-economic tailwinds for cleantech sector
o Rising global demand for energy
o Middle-class-ization of China/India
o Population growth in developing world
o Rising concern for cost of raw materials (e.g. oil)
o Headwind: cheap natural gas
o Alternative Energy = National Security
o Increased realization of carbon constraints
o Green Space Race or our generation’s Cold War is a “Clean War”
with China
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6. Key Investment Criteria for Cleantech
• Address massive market
• Significant cost/performance advantage
o Chindia price targets, decline w/ scale
• Scalability (production & business model)
• Low adoption risk/high infrastructure compatibility
• Feasible capital requirement/high capital flexibility
• Time to market matches investor horizons
o Short innovation cycles to add value between funding rounds
• Team – experience scaling enterprises
• Robust I.P.
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7. Is VC a Good Match for Your Business?
• Desire to grow fast
• Target large addressable markets
• Plausible exit of $100+MM
o Most VC’s are targeting 10x returns, early stage investors even
more
• Experienced team?
o Uphill battle if not – pull in experienced advisors/angel investors
• Control freak?
o When you take VC $$, you are taking on an active partner
• Time horizon to exit – lifestyle businesses need not apply
• Use of proceeds – VC not a source of refinancing or cash out
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8. Michigan VC Funding Overview
$250k - $1m $1m - $3m $3m – $20m
INVESTIGATION SEED DEVELOPMENT EARLY GROWTH MATURITY
Funds I & II
Pure MI Match Funding
InvestMichigan! Funds
PROFIT
TIME
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9. Typical Venture Funding Structures
Stage Amounts Form Equity Stake
Convertible
Seed $250k - $1,000k 10-40%
Loan/Equity
Early $1mm - $5mm Preferred Equity 20-40%
Expansion $5mm – 10mm Preferred Equity 10-30%
Growth $10mm+ Preferred Equity 20-40%
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10. Milestone Funding for Cleantech
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11. Contact Me
Jeff Bocan, Managing Director
Beringea
Email: jbocan@beringea.com
Phone: 248-489-9000
Twitter: @jeffbocan
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