Investing in solutions to serious problems


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  • Investing in solutions to serious problems

    1. 1. CleanTech Market : VC Opportunities for Taiwan Hank Habicht Managing Partner, SAIL Ventures Taipei Forum January 14, 2009
    2. 2. Objectives for Today <ul><li>Describe global and U.S. trends in Clean Technology (“CleanTech”) development and investment, including projections for 2009 </li></ul><ul><li>Outline the role venture capital and public-private partnerships play in bringing new technology to market </li></ul><ul><li>Discuss opportunities for Taiwan and ideas for accelerating investments and market growth for Taiwan CleanTech firms and products </li></ul>A key to success is teaming with the right partners
    3. 3. Taiwan Can Help Change the World <ul><li>Thesis : Clean Technology can change how we produce and consume. Success depends on: </li></ul><ul><li>Entrepreneurs funded by VCs and public </li></ul><ul><li>Government support for new ideas/ventures </li></ul><ul><li>Customers willing to try new ideas </li></ul><ul><li>Strong partnerships (businesses & government) </li></ul><ul><li>Taiwan has excellent combination of innovation, entrepreneurial business culture and partnerships to succeed in Cleantech </li></ul>
    4. 4. Current Perspective <ul><li>SAIL Venture Partners : CleanTech focus, based in California and Washington, D.C; 5 Partners; 10 current portfolio companies ( ) </li></ul><ul><li>GETF: developing clean energy and water projects globally ( ) </li></ul><ul><li>Commissioner, National Commission on Energy Policy ( ) </li></ul><ul><li>Steering Committee, Energy Future Coalition ( ), ACORE, </li></ul><ul><li>and 25x25 </li></ul>
    5. 5. SAIL Team Synergy Hank Habicht CleanTech Markets/Policy <ul><li>COO of EPA </li></ul><ul><li>US Attorney General –Energy & Environment </li></ul><ul><li>Senior VP Safety-Kleen </li></ul><ul><li>Head of M&A and Corp Acct sales </li></ul><ul><li>Principal in Environmental Venture Fund (3x) </li></ul><ul><li>Founder ACORE </li></ul><ul><li>Advisor to Secretary of Energy and NREL </li></ul><ul><li>Princeton BA </li></ul><ul><li>Virginia JD </li></ul>David Jones Business & Financial Models <ul><li>25-Year Venture Capitalist as Managing Partner </li></ul><ul><li>60 Investments </li></ul><ul><li>Northwest Pipe </li></ul><ul><li>Co-invested with 100 other VC’s </li></ul><ul><li>Chairman NASBIC </li></ul><ul><li>4 Early-Stage Funds </li></ul><ul><li>Chairman or Director of 12 Public/Private Companies </li></ul><ul><li>Dartmouth BA </li></ul><ul><li>USC JD & MBA </li></ul>Walter Schindler Deal Structure/Exits <ul><li>Managing Partner Gibson Dunn and Crutcher </li></ul><ul><li>Alternative Energy Expert at GDC </li></ul><ul><li>60 M&A / IPO’s (Ultrasystems, PIMCO and RemedyTemp) </li></ul><ul><li>US Bank Advisory Board </li></ul><ul><li>CEO Roundtable—UC Irvine </li></ul><ul><li>20 years strategic advisor on value creation </li></ul><ul><li>Harvard JD </li></ul><ul><li>Yale BA, MA, PhD </li></ul>Alan Sellers Management Systems/People <ul><li>Partner Westar Capital </li></ul><ul><li>Executive Pacific Holding Company </li></ul><ul><li>EVP Dole Foods </li></ul><ul><li>VP Ultrasystems </li></ul><ul><li>General Counsel Pacific Holdings </li></ul><ul><li>25-year Boards </li></ul><ul><li>Wilmington Trust Advisory Board </li></ul><ul><li>Wharton MBA </li></ul><ul><li>Columbia JD/CPA </li></ul><ul><li>Yale BA </li></ul><ul><li>Founded and grew start-up to $100M and 2,000 employees </li></ul><ul><li>Serial Entrepreneur in IT and Energy </li></ul><ul><li>Led DAI, Frontstep, Interact, Starco, and Evans </li></ul><ul><li>Led 2 NASDAQ Turnarounds </li></ul><ul><li>Chairman or Director of 15 Companies </li></ul><ul><li>YPO Exec Ed @ MIT & Harvard Business School </li></ul>Thomas Cain Operations/ Engineering
    6. 6. Strategy and Execution <ul><li>Deploy networks of experts to find optimal combination of technology, team and scalable business model </li></ul><ul><li>Deep understanding of domain trends: Identify biggest problems whose solutions can be profitable in a VC timeframe </li></ul><ul><li>Sophisticated and documented process </li></ul><ul><li>Engage all partners to deliver victories, add value and build deep relationships with portfolio companies </li></ul>
    7. 7. What is CleanTech? Clean Technology Large, Growing, Profitable Markets Enormous Growth Potential <ul><li>Technology innovation in the more efficient use of energy, water, food and other scarce and valuable global resources: </li></ul><ul><li>- Optimize use of natural resources </li></ul><ul><li>- Reduce ecological impact and </li></ul><ul><li>- Add economic value by lowering costs and improving profits </li></ul><ul><li>“ May be the largest wealth creation opportunity of the 21 st century” </li></ul><ul><li>Multiple waves of technological innovation </li></ul><ul><li>CleanTech is the world’s fastest growing investment category </li></ul><ul><li>The 3 rd largest venture capital investment category: over 14% market share in North America, 18% in Europe </li></ul><ul><li>CleanTech markets are large multibillion dollar global markets </li></ul>
    8. 8. The Market: Why 2009 is a Big Year <ul><li>Impact of credit crisis and volatile energy prices </li></ul><ul><li>Competition for scarce energy and water resources </li></ul><ul><li>Political transitioning: Obama’s Agenda (proposed $150Billion to invest in cleantech) </li></ul><ul><li>Climate change has become a top priority </li></ul><ul><li>The power of emerging economies as buyers and users of clean technology </li></ul>Strong drivers of change in energy and water markets
    9. 9. Many Ways to Finance Innovation <ul><li>Entrepreneur Personal Funds </li></ul><ul><li>Personal credit card & other borrowings </li></ul><ul><li>Venture capital </li></ul><ul><li>Venture leasing </li></ul><ul><li>Merger and Acquisition </li></ul><ul><li>Secondary/Follow-on Public Offering </li></ul><ul><li>Buyout/Acquisition Financing </li></ul><ul><li>Corporate Debt </li></ul><ul><li>“Friends and Family” </li></ul><ul><li>Angel investors </li></ul><ul><li>Corporate direct investment </li></ul><ul><li>Mezzanine Financing </li></ul><ul><li>Initial Public Offering </li></ul><ul><li>Private Placements – Debt & Equity </li></ul><ul><li>Corporate R&D </li></ul>Source: “Green Technology and Venture Capital Investment” presentation, The National Venture Capital Association, March 2008.
    10. 10. Analysis of Investment Styles – Risk and Return Profiles, Financing Source: Sustainable Development Investments presentation by Citi Alternative Investments Venture Capital: New Clean/Environmental Technologies Clean Energy Infrastructure Existing and New Technologies Buyout/ Expansion/ PIPES Angel / A B / C D / IPO Technology Identification & Business Formation Pilot Plant Demo Plant First Commercial Scale Plant Project Development Project Finance (Infrastructure) Portfolio of Assets <ul><li>40% + IRRs </li></ul><ul><li>New “disruptive technologies, such as: </li></ul><ul><li>- Solar thin film, other non crystalline technologies </li></ul><ul><li>- 2 nd generation biofuels, including cellulosic </li></ul><ul><li>ethanol </li></ul><ul><li>- Coal gasification; carbon capture & sequestration </li></ul><ul><li>- Battery technology (auto) </li></ul><ul><li>25%-30% + IRRs </li></ul><ul><li>Development promote: </li></ul><ul><li>-Repayment of costs at financial close </li></ul><ul><li>- Equity promote to developer </li></ul><ul><li>Growth: wind, solar thermal, geothermal, biofuels, waste-to-energy, hydro </li></ul><ul><li>12% - 20% IRRs, depending on cash flow volatility – i.e. low (landfill gas); high (biofuels) </li></ul><ul><li>25% + IRR </li></ul><ul><li>Growth </li></ul><ul><li>Equipment/services </li></ul><ul><li>Generation/develop. </li></ul><ul><li>$100bn total market cap all clean energy </li></ul>70 – 80% Debt 100% Equity 70 -100% Equity Varies Medium <ul><li>Financial risks </li></ul><ul><ul><li>Performance guarantees </li></ul></ul><ul><li>Site and permits </li></ul><ul><li>Engineering & design </li></ul><ul><li>Additional scale up: </li></ul><ul><ul><li>Construction cost </li></ul></ul><ul><ul><li>O&M </li></ul></ul><ul><ul><li>Performance </li></ul></ul><ul><li>Site selection </li></ul><ul><li>Permitting </li></ul><ul><li>Securing equipment </li></ul><ul><li>Contractors’ cost estimates </li></ul><ul><li>Organizational structure and management </li></ul><ul><li>Financing </li></ul>High <ul><li>Technology Selection </li></ul><ul><li>Business Formation </li></ul><ul><li>Initial management selection </li></ul><ul><li>Execution Strategy </li></ul><ul><li>Technology scale up risk from “bench scale” to integrated demonstration scale </li></ul><ul><li>Engineering, design </li></ul><ul><li>Management </li></ul>Low to Medium <ul><li>Off-take agreements (i.e. Power Purchase Agreements or “PPA”s) </li></ul><ul><li>Engineering, Procurement and Construction (“EPC”) contracts </li></ul><ul><li>Supply agreements & logistics </li></ul><ul><li>Project debt & equity financing </li></ul><ul><li>Hedging </li></ul><ul><li>Valuations </li></ul><ul><li>Growth potential/ incremental development </li></ul><ul><li>Capital structure </li></ul>
    11. 11. US Venture Capital Investment in Perspective <ul><li>US GDP (national income) $12.5 trillion annually </li></ul><ul><li>Hedge fund intake $1.5 trillion over last 3 years (estimated) </li></ul><ul><li>Mutual fund intake $158 billion in 2006 </li></ul><ul><li>Buyout intake $103 billion in 2006 </li></ul><ul><li>Venture capital intake $28.6 billion in 2006 </li></ul><ul><ul><li>Venture capital fundraising & investment Is 0.2% of total GDP </li></ul></ul>Source: BLS website, Investment Company Institute, Thomson Financial, NVCA
    12. 12. Global Insight Study <ul><li>In 2006, venture backed companies: </li></ul><ul><ul><li>Provided 10.4 million US jobs </li></ul></ul><ul><ul><li>Had sales of $2.3 trillion </li></ul></ul><ul><ul><ul><li>Represents 17.6% of GDP </li></ul></ul></ul><ul><ul><li>Still dominated venture-created sectors </li></ul></ul><ul><ul><ul><li>56% of biotech revenue </li></ul></ul></ul><ul><ul><ul><li>78% of computer and peripherals revenue </li></ul></ul></ul><ul><ul><ul><li>94% of computer and peripherals jobs </li></ul></ul></ul><ul><ul><ul><li>88% of software sector jobs </li></ul></ul></ul><ul><ul><li>Outgrew the economy 2003-2006 in every sector </li></ul></ul>Source: Venture Impact 2006 by Global Insight
    13. 13. Venture-Backed Employment As a % of total US Pvt Jobs in 2006 Outpaces 2003 - 2006 Total US Job Growth VC-Backed US Jobs (millions) Source: Venture Impact 2006 by Global Insight
    14. 14. Venture Capital Investment is Productive ... <ul><li>For VC every dollar invested in 1970-2001, there was $7.90 in US revenue during 2006 </li></ul><ul><li>For every $28,463 of venture capital invested in 1970-2001, there was one job in the year 2006 </li></ul><ul><li>Note these ratios are based on investment through 2001 ($296B) because investment after that time has likely had little effect on 2006 jobs and revenues. If investment through 2006 ($421B) is used, the ratios would be $5.55 and $40,364 respectively </li></ul>Source: Venture Impact 2006 by Global Insight
    15. 15. CleanTech VC Scales Relatively Top 6 U.S. Venture Capital Industries, Percent Change Q3 2001 to Q3 2007 Source: CleanTech Venture Network
    16. 16. CleanTech VC Scales Absolutely Annual North American CleanTech Venture Capital Deals and Investment Totals 2001 to Q3 2007 (Millions of dollars) Source: CleanTech Venture Network
    17. 17. CleanTech Index 45 US Traded Stocks Combined Market Cap of approx $280BN Minimum market float of $150M and 50%+ of sales or operating profits from CleanTech businesses Source: CleanTech Venture Network
    18. 18. Can CleanTech Make Money? <ul><li>CleanTech IPO’s have yielded returns to pre-IPO investors of 5.5X , while European venture-backed IPO’s have generated returns of over 8X . </li></ul><ul><li>Returns on CleanTech M&A transactions have been 4.3X on invested equity </li></ul><ul><li>A hypothetical portfolio of CleanTech venture capital investments would have delivered an estimated IRR of approximately 30%. </li></ul><ul><li>Based on a 2006 study by the CleanTech Group </li></ul>CleanTech Venture Capital: Performance
    19. 19. Where Did the CleanTech Money Go in 2008? (A Record $8.4 Billion) Source: The Cleantech Group; January 12, 2009 Report ( ) $148 million (1.9%) Water $166 million (2.0%) Agriculture $345 million (4.1%) Electric Grid $502 million (6.0%) Wind $795 million (9.5%) Transportation (including electric vehicles, advanced batteries, fuel cells) $904 million (11.0%) Biofuels (including ethanol, biodiesel, synthetic biology, algae) $3.3 billion (40%) Solar Amount Invested and percent of total Technology Sector Top Venture Capital Clean Technology Sectors
    20. 20. What Makes A Market Attractive to Venture Capital? <ul><li>Capital formation </li></ul><ul><ul><li>Prudent man rule – enabled pension investment </li></ul></ul><ul><ul><li>Limited Partner laws </li></ul></ul><ul><ul><li>Capital gains tax reduction </li></ul></ul><ul><li>Empowered entrepreneurs </li></ul><ul><ul><li>Capital gains tax reductions </li></ul></ul><ul><ul><li>Stock options/team building tools </li></ul></ul><ul><ul><li>Reasonable bankruptcy laws </li></ul></ul><ul><li>Protect companies – Patent and IP laws </li></ul><ul><li>Abundant customers willing to do business with SMEs </li></ul><ul><li>Exit markets – the NASDAQ </li></ul><ul><li>Face-to-face investing/proximity </li></ul><ul><li>Adoption--Cultural acceptance of new ideas </li></ul>Source: “Green Technology and Venture Capital Investment” presentation, The National Venture Capital Association, March 2008.
    21. 21. Investment Drivers <ul><li>High Energy Prices </li></ul><ul><li>Imported Mideast Oil </li></ul><ul><li>Climate Change </li></ul>
    22. 22. Investment Drivers 4. Electric Grid Capacity Issues 5. Successful Cost Reductions/Technology Innovations
    23. 23. Investment Drivers <ul><li>6. Public Awareness/Corporate Action </li></ul>
    24. 24. A Venture Capital Perspective <ul><li>We look for: </li></ul><ul><li>Huge TAM (Total Available Market) </li></ul><ul><li>“ White Space” = Unmet Needs and Big Problems </li></ul><ul><li>Team + Technology = Major Market Advantage </li></ul><ul><li>Time Frames </li></ul><ul><ul><li>Near-term beachheads (market share) </li></ul></ul><ul><ul><li>Exits in 5-7 years </li></ul></ul>
    25. 25. Urban Infrastructure Needs Makeover The World’s Urban Infrastructure Needs More Than $40 Trillion
    26. 26. Reducing Carbon – Targets Source: CleanTech Venture Network
    27. 27. Examples of CleanTech Alternative Energy and Renewable Fuels – Solar, wind, and biomass power; waste to energy; biofuels Electrical Efficiency – New Electric Motor is 50% more efficient, reducing strain on the electric grid Energy Storage – Batteries that last for the life of the product, or perform large-scale load leveling Lighting – New light source technology uses 1/10 the electrical power Energy Efficiency – New Spark Plug causes more complete combustion, greater fuel economy and less pollution
    28. 28. Clean Energy Yields Big Benefits Source: IEA, IPCC, Mckinsey, and other sources with NREL benefits analysis Driver Global Clean Energy Transformation Opportunity U.S. Benefits 2020 2050 2020 2050 Economic $300-600 billion per year of new RE and EE investment $600-1200 billion per year of new RE and EE investment Up to $30 billion per year of new exports and 750,000 jobs, plus lower prices and balance of trade benefits Up to $200 billion per year of new exports and 8 million jobs, plus lower prices and balance of trade benefits Climate 10-20% reductions in GHG emissions 50-80% reductions in GHG emissions 10-20% reductions in global emissions 50-85% reductions in Global emissions Energy Security 10-20% decline in oil use from 2005 25-40% decline in oil use from 2005 Decreased volatility and 6-9% reduction in global oil prices Decreased volatility and 15-20% reduction in global oil prices Development Universal energy access Universal energy access Global economic growth and stability & U.S. leadership Global economic growth and stability & U.S. leadership
    29. 29. Innovations in Efficiency <ul><li>Demand Side Management: The resurgence of “Negawatts” </li></ul><ul><li>Lighting: 30% of the load at 15% efficiency </li></ul><ul><li>Edison Vs. Tesla: AC Vs. DC </li></ul><ul><li>Green Buildings: Coming of Age, 20 years later </li></ul>IEA says 80% of CO 2 Reductions from Efficiency
    30. 30. Green Buildings <ul><li>A platform for multiple technologies </li></ul><ul><ul><ul><li>Combined heat and power systems </li></ul></ul></ul><ul><ul><ul><li>Nano-insulation </li></ul></ul></ul><ul><ul><ul><li>“ Smart” windows </li></ul></ul></ul><ul><ul><ul><li>Advanced lighting applications </li></ul></ul></ul><ul><ul><ul><li>Renewable power sources </li></ul></ul></ul><ul><ul><ul><li>Smart appliances </li></ul></ul></ul><ul><ul><ul><li>Load shifting/storage </li></ul></ul></ul>
    31. 31. Connecting Vehicles and Grid <ul><li>Electric vehicles to use off-peak power </li></ul><ul><li>Key is advanced batteries with maximum energy and power density </li></ul><ul><li>President Obama goal: 1 million plug-in Hybrid Vehicles </li></ul><ul><li>Major Companies inU.S. Battery Consortium </li></ul>
    32. 32. Drivers for Global Water Mark ets <ul><li>20 th century: Population grew 3x, water use </li></ul><ul><li>grew 6x </li></ul><ul><li>Shortages: 3 billion people face </li></ul><ul><li>water scarcity by 2025 </li></ul><ul><li>Water market exceeds $500 billion </li></ul><ul><li>(GlobalWaterIntelligence) </li></ul><ul><li>Private equity accelerating </li></ul><ul><li>India and China </li></ul><ul><ul><li>Water-spending growth >20% annually </li></ul></ul><ul><li>Infrastructure needs ($5 trillion): </li></ul><ul><li>Big gaps in coverage </li></ul>
    33. 33. Water Technologies <ul><li>Information/analytics/monitoring </li></ul><ul><li>Demand-side technologies, cost-effective efficiency opportunities </li></ul><ul><ul><li>Agriculture: 10-50% (e.g., CIMIS) </li></ul></ul><ul><ul><li>Industry: 40-90% (e.g., GEMI) </li></ul></ul><ul><ul><li>Cities: 30% </li></ul></ul><ul><li>Supply-side technologies </li></ul><ul><ul><li>Adv. purification (e.g., adv. sewage treatment, recycling) </li></ul></ul><ul><ul><li>Source augmentation (e.g., rainwater harvesting) </li></ul></ul><ul><ul><li>Water security </li></ul></ul><ul><ul><li>Desalination </li></ul></ul><ul><li>Next big thing: Energy-water interface </li></ul>(Both hardware and practices)
    34. 34. Selected Investments of SAIL I
    35. 35. <ul><li>Problems Solved: Globally Affordable pathogen free drinking water conveniently accessible. </li></ul><ul><li>Product: UV water purification systems </li></ul><ul><li>Source: Approached by WHI & Dow Chemical, co-investor </li></ul><ul><li>IP Estate: solid patents </li></ul><ul><li>Management: Tralance Addy, President & CEO; David Katz, CFO </li></ul><ul><li>Environmental Impact: Major human quality of life; life expectancy; education; carbon reduction. </li></ul>Other Investors Dr. Anji Reddy, Johnson & Johnson, Acumen Fund, International Finance Corporation, Dow Chemical Examples of SAIL ’s value-add Provided key guidance on international business, strategic relationships and business model. Helping at high levels to source financing for village systems from corporate, International banks and Indian institutions. Awards Toshiba Green Innovation Award 2007 Discover magazine’s Award for Technical Innovation & “Best of the Decade” invention US News & World Report cites as one of “20 Ways to Save the World”
    36. 36. <ul><li>Problems Solved: Eliminate peak-power requirements due to air-conditioning by shifting consumption to night. </li></ul><ul><li>Product: Refrigeration-based air conditioning unit that makes ice at night </li></ul><ul><li>Source: Trade show </li></ul><ul><li>IP Estate: Robust patents </li></ul><ul><li>Management: Frank Ramirez, CEO; Greg Tropsa, COO; Brian Parsennet, CTO </li></ul><ul><li>Environmental Impact: Reduce 95% of peak-power demand for A/C; lowest-cost LEED/Title 24 building credits; each unit reduces GHG equivalent of 2 cars. </li></ul>Other Investors Goldman Sachs, Good Energies, Joe Gorman, Pete Higgins, Energy Capital Partners Examples of SAIL ’s value-add Focused company on reducing costs through off-shore sourcing. Assisted in market development with regulators and business introductions. Awards 2005 Innovation Quotient Award 2005 Top 10 Green Building product 2003, 2004 & 2005 “Most Promising Company,” Energy Venture Fair 2004 “World’s Best Technology” Gold Award
    37. 37. <ul><li>Problems Solved: Incomplete burning of gasoline or 2-cycle fuel. </li></ul><ul><li>Product: Replacement intelligent plug (ultracapacitor) that generates several thousand times the spark of current plugs. </li></ul><ul><li>Source: Trade show </li></ul><ul><li>IP Estate: Robust IP </li></ul><ul><li>Management: Dan Parker, CEO; Lou Camilli, President; Jim Scott, CMO; Brian Templeton, CFO Environmental Impact: Reduction of gasoline consumption in US by 30 million gallons/day (11B/yr) and reduction of pollutant generated on remaining 360 million gallons/day. </li></ul>Other Investors Altira Ventures Examples of SAIL ’s value-add Introduction to advanced direct selling technology; Genalytics. Tim Ford, ex-CEO of JC Whitney. Secured commitment from Nissan engineers to test. Test Results Vehicle Economy Torque 0-60 Marquis 10.5% 11% 5% Corolla 2.2% 5% 10% Avalanche 8.4% 11.2% 7.8% BMW 740i 8.4% 6.9% 8.0%  
    38. 38. <ul><li>Problems Solved: 400M 60% efficient HVAC electric motors in US/yr. Millions more in Washer/Dryers, pools, dishwashers, refrigerators </li></ul><ul><li>Product: Low-cost, brushless DC motor with Electronic Communication (ECM) at 90% efficiency. </li></ul><ul><li>Source: Firm Advisor </li></ul><ul><li>IP Estate: Robust IP </li></ul><ul><li>Management: James Jeung, CTO </li></ul><ul><li>Director: Thomas Cain </li></ul><ul><li>Environmental Impact: DOE estimates US electric grid is 60% electric motor. SN Tech motors are 80% more efficient than existing. Result is removing pressure on grid and eliminating peak-power issues. </li></ul>Other Investors Korean Angel investors Examples of SAIL ’s value-add Recruitment of CEO, CFO, initial sales staff. Identify new rapid adoption market. Define initial marketing strategy and initiate IP estate development. Awards Silver Medal – 18 th , 20 th , 26 th Salon International Inventions, Switzerland IFIA Cup Prize, Germany Gold Prize IENA
    39. 39. <ul><li>Problems Solved: Reduce pollutants from burning fossil fuels through simple-to-apply additives. </li></ul><ul><li>Product: Proven products for diesel, biodiesel and 2-cycle. Products in final commercialization for residual & gasoline. Product in development for coal. </li></ul><ul><li>Source: Referral </li></ul><ul><li>IP Estate: Patents of biotechnology (beta-carotene) </li></ul><ul><li>Management: Jim Cleary, CEO; Fred Jordan, CTO; Kevin McGlensey, President; Jerome Kaiser, CFO </li></ul><ul><li>Environmental Impact: Reduction of millions of tons of NOx and particulates; removes significant conventional pollutants from each gallon of fossil fuel. </li></ul>Other Investors Paladin Homeland Security Fund, Ridgewood Ventures Examples of SAIL ’s value-add Led company to obtain 1 st certification, Texas LED. Sourced major strategic customer, protected IP. Led development of 1 st manufacturing facility. Raised $27M in Series C financing. Awards Red Herring’s “100 Most Innovative Companies” EPA Scientific and Technology Achievement Award
    40. 40. <ul><li>Problems Solved: Catalyze the CleanTech Sector through building networks of conferences, indexes, advisory services and recruiting. </li></ul><ul><li>Product: CleanTech Venture Network (US, Europe, China); CleanTech Advisory Service; CleanTech Executive Search; CleanTech Forum, CleanTech Indices </li></ul><ul><li>Source: Strategic target </li></ul><ul><li>IP Estate: CleanTech trademark </li></ul><ul><li>Management: Nick Parker, Chairman; Keith Raab, CEO </li></ul><ul><li>Environmental Impact: Leading enabler of CleanTech investments and purchases of sustainable technology. Leader in investment partners in US, China and Europe. </li></ul>Other Investors Credit Suisse, Bob Epstein (closing with a top-tier investment bank) Examples of SAIL ’s value-add Advised company on internal operational matters, expansion and strategic relationships; developed high-level government contacts, private partners and sponsors. Enablers Ernst & Young, Global Environment Fund, Jefferies, Wilson Sonsini, Masdar, HellerEhrman, Canaccord Adams, 3i, Rockport Capital, Expansion Capital, John Deere
    41. 41. <ul><li>Problems Solved: Efficient, safe, economical storage of massive amounts of electricity to buffer wind/solar farms, replace peak power plants, load shift buildings from peak. </li></ul><ul><li>Product: Solid lead acid 1kw battery and power management system designed to place in low cost massive array configuration. </li></ul><ul><li>Source: Personal Contact with Angel Investor </li></ul><ul><li>IP Estate: Robust IP & Trade Secret </li></ul><ul><li>Management: Carlos Coe, CEO; Aeron Hurst, Technologist; Michael Breen, CFO </li></ul><ul><li>Environmental Impact: Reduction of fossil fuel consumption for electrical generation, enable renewable fuel usage, relieve current grid stress points. </li></ul><ul><li>Other Institutional Investors None </li></ul>Large scale Storage <ul><li>Initial Customers Home Depot, Grainger, Freescale, TEES </li></ul><ul><li>Examples of SAIL ’s value-add: </li></ul><ul><li>Secure IP of batteries and power management. Resolve market exclusivities. Create strategy for trade secret protection. Facilitation of major new customer acquisition. Creation of business plan. </li></ul><ul><li>Test Results </li></ul><ul><li>Imperceptible resistance under load </li></ul><ul><li>Less than 7% round trip energy loss </li></ul><ul><li>$200K /MW hr of storage </li></ul><ul><li>10-20 Year Battery Life </li></ul><ul><li>5000 100/5 deep discharge cycles </li></ul><ul><li>250,000 90/20 charge/discharge cycles </li></ul><ul><li>Full charge in 5 minutes </li></ul><ul><li>100MW/hr array configurations   </li></ul>
    42. 42. Finding the Best Deals <ul><li>SAIL Team focuses on strategic priorities, contacts network of sources weekly </li></ul><ul><li>Dedicated networks of science and business advisors </li></ul><ul><li>All 5 partners have extensive deal networks </li></ul><ul><li>Partners review more than 10 possible deals per week – deeper review of 1/10 </li></ul>
    43. 43. Directions in CleanTech <ul><li>CleanTech sectors and potential portfolio allocations include: </li></ul><ul><ul><li>Renewable Energy </li></ul></ul><ul><ul><li>Energy Efficiency </li></ul></ul><ul><ul><li>Water Quality and Supply </li></ul></ul><ul><ul><li>“ Smart” Electricity Grid </li></ul></ul><ul><ul><li>Electric (PHEV) Vehicles </li></ul></ul><ul><ul><li>Enabling Technologies </li></ul></ul><ul><ul><li>Alternative Materials </li></ul></ul><ul><ul><li>Pollution/Waste Reduction and Conversion </li></ul></ul>
    44. 44. CleanTech Top 10 Regions • US : West Coast ($1.3B) • US : Northeast ($526M) • Western Europe ($394M) • US : Southwest ($299M) • US : Northwest ($283M) • Southern Europe ($212M) • US : Southeast ($107M) • Western Canada ($104M) • Eastern China ($100M) • US : Midwest ($85M) The Top 10 CleanTech Regions in Q1 – Q3 2007 The top ten regions accounted for 3.40B out of 3.65B for Q1 – Q3 2007, or 93%. Source: CleanTech Venture Network
    45. 45. Issues Affecting CleanTech Investments <ul><li>U.S. Climate Policy/Global Carbon Prices </li></ul><ul><li>Linkages among entire financial value chain (Debt/Project Finance-VC-Later Equity- Emission Credits) </li></ul><ul><li>Fiscal Incentives/Tax and Pollution Credits </li></ul><ul><li>Emerging economies – especially India & China </li></ul><ul><li>Research, Development and Customer Adoption – ”Culture Change” </li></ul>
    46. 46. Critical Success Factors for Venture Investing <ul><li>Ability to grow value and achieve exit in a strategic acquisition or IPO – requires technology packaged in business model with real customers </li></ul><ul><li>Investing at stage of growth that balances risk and value </li></ul><ul><li>Team with value-added partners </li></ul><ul><li>Work with government but do not rely on government </li></ul>
    47. 47. Partnerships that Help Companies Succeed <ul><li>Successful CleanTech firms must partner with government, NGOs and other private firms </li></ul><ul><li>Partners must enhance ability to grow market share and conserve cash </li></ul><ul><li>A country’s economic and policy environment must create right incentives to take risks (capital gain taxes, investment and R&D tax credits, stock options, IP laws, incentives for customer adoption of new technologies, exits) </li></ul>
    48. 48. Areas of Potential Collaboration between Taiwan and Other Investors <ul><li>Electricity – grid management; efficient delivery and storage of power (Island strategy) </li></ul><ul><li>Renewable power and waste to energy </li></ul><ul><li>Transportation – new electric vehicles and cost-effective, long-life storage technologies </li></ul><ul><li>Green buildings – effective building management </li></ul><ul><li>Water management and monitoring </li></ul><ul><li>Chemical alternatives & new materials </li></ul>
    49. 49. SAIL into the future <ul><li>Build sector-leading returns </li></ul><ul><ul><ul><li>Fully deploy Partners’ collective skill sets and global relationships </li></ul></ul></ul><ul><ul><ul><li>Add value across spectrum of business needs </li></ul></ul></ul><ul><li>Deliver economic value and measurable environmental improvement </li></ul><ul><li>Create the leading CleanTech venture platform combining domain mastery with passion for results </li></ul><ul><li>Partner with great companies and governments … like Taiwan </li></ul>
    50. 50. <ul><li>Questions? </li></ul><ul><li>Thank you! </li></ul><ul><li>[email_address] </li></ul>