Energy and the Process of Innovation

Energy and The Process of Innovation Stephan Dolezalek VantagePoint Venture Partners April 8, 2010

VPVP CleanTech Portfolio Page Electrification of Transport Energy Storage Grid Management LED Lighting and Building Efficiency Power Generation Bio-chemical Waste to Energy Solid oxide fuel cell Li-ion batteries Utility grade storage Advanced nanosilicon cathodes Electric vehicle enablement Electric vehicle Energy control systems Home energy solutions – North America Home energy solutions - Europe LED light bulb LED arrays Utility-scale solar thermal Municipal waste conversion Wastewater recovery Energy from Black Liquor CIGS panels BIPV 3rd generation solar cells High efficiency windows Bio butanol Algal biofuels Cellulosic ethanol LED wafers Next-gen LEDs Digital Controls Next-gen turbine design

Global Strategic Partners Page (PG&E affiliate)
Meaningful Contributions
Formal partnership agreement
Investors in VantagePoint; co-investors in portfolio companies
Technical and market diligence
Industry sector insights
Deal sourcing
Engagement with portfolio companies
Commercialization and scale-up
International expansion
M&A
Current engagements with Adura, Better Place, Bridgelux, BrightSource, Tendril, Premium Power, SuperBulbs
To be announced …

Innovation Drives Economic Growth Renewable Energy Electric Transport LED Lighting Energy Storage Energy Efficiency Smart Grid Water Technologies Biomaterials and Biochemicals (with edits to 6 th wave)

What it takes to build one transformational company INVENTION AND INNOVATION ENTREPRENEURSHIP GROWTH CAPITAL MANAGEMENT PARTNERSHIP EXECUTION….. $ valuation

’s European Entrepreneur Today’s American Entrepreneur The New Global Entrepreneur Perspective Matters Those things would be great as long as I still get my pension I don’t have to give up on a good salary to get these stock options do I? I want everything they want and I don’t need much to pay the rent and for food

Page
Well Intentioned Means of Protection vs Loss :
Sarbanes Oxley
Accounting Treatment of Stock Options
SEC Regulatory Changes
Taxation of Carried Interest
Attempts to Decrease Volatility
Corporate Taxation Hikes
Can We afford the Consequences?
Fewer US IPO’s
Job Losses
Fewer Companies Created
Fewer Venture Firms
Protection of Incumbents
The Land of Equal Opportunity ‘ New jobs come from new companies, not from small or big business’ 2009 Kaufman Foundation Study Result

Page So how did we get from here…

Page To here (in less than 5 years)? Now Everyone has an Electric

Example of rapid industry transformation Page 2005 2006 2007 2008 VPVP invests in Tesla Motors GM begins working on the Volt GM’s Bob Lutz on Tesla: “That tore it for me,” says Lutz. “If some Silicon Valley startup can solve this equation, no one is going to tell me anymore that it’s unfeasible.” VPVP invests in Better Place 2009 2009 Frankfurt Auto Show Electric vehicles: From “dead” to industry-wide in less than 5 years “ Who Killed the Electric Car” documentary released, profiling the short-lived EV experiments of the 1990s From the Credit Suisse October 2009 “Electric Vehicles” report:
“ Electric vehicles offer one of the fastest growth stories over the next 20 years”
“ Nearly every auto-maker has plans to develop electric vehicles, with many models targeted to launch in 2010”
GM CEO Rick Wagoner’s speech opening the 2007 L.A. Auto Show: “At the end of the day, the transformation from mechanical automobiles to vehicles that run on electricity will be as important as the transition from horses to horsepower.” 2004 2003 GM’s Bob Lutz to Newsweek: “The electrification of the automobile is inevitable." * GM’s Bob Lutz proposes that GM pursue an electric vehicle again – but the idea "bombed" inside GM, he says. "I got beaten down a number of times.” * Tesla announces it will release a sports car using the same Li-Ion batteries GM declined to use when Lutz pushed in 2003 GM’s new Volt is showcased at the 2007 Detroit Auto Show GM had produced the EV1 from 1996 to 1999 (for lease only), but then shut down the production line and pulled the cars off the road. From Automotive News: “ Virtually every automaker is displaying an electric vehicle or plug-in hybrid .” * Newsweek, Jan. 8, 2008. “Bob Lutz: The Man Who Revived the Electric Car.” VPVP proposes strategic partnership with Ford and Chrysler (unsuccessful) Renault and Better Place commit to bring 100,000 Fluence ZE EVs to market (Tracing the experience of GM and VantagePoint) Better Place in talks with other major automakers

Page Try to buy one of these recently? Remember how hard TV manufacturers fought the requirement to cross over to digital broadcasting; saying customers would never switch in time?

LED’s are changing more than just TV Page

Moore’s law for Lighting – Haitz’s Law Page

Costs Decline as New Technologies Achieve Scale Page Source: DisplaySearch; First Solar company website LCD Televisions Solar PV

Fresh off this morning’s press Page

LED’s meet Solar Innovation Merges Light Absorption and Generation Page

Modernization is the Ultimate Driver of Change Page 1879: Edison incandescent light bulb 1901: First GE alternating current power coal plant 1885: First internal combustion engine automobile produced 1930s: Build- out of today’s electricity grid 1850 1925 1950 1875 1900 The Stone Age Didn’t End Because we Ran Out of Stones We’ve seen this movie before: Technological innovation yields better and cheaper ways of doing things
Horse to Automobiles
1900 – >200k horses in NYC/automobile introduced
1912 – More automobiles than horses
1917 – 0 horses
Landlines to Mobile
1991 – 16M mobile phones globally
2010 – 4.6B mobile phones globally

Page Telecom: from landlines to mobile Photography: from film to digital Energy: from fossil fuels to renewables History has taught us that once industry-transforming tipping points are reached, there is no looking back. In 2008, renewables represented nearly half of all net new capacity installed. Source: US OECD Source: PMA Marketing Research ; Source: EIA

With every major wave of innovation, only a small number of winners emerges early on 1990 2000 1980 Personal computers Software Networking Biotech Internet Wind Solar (PV) Electric vehicles (EVs) EV infrastructure Solar-thermal Smart grid Power storage Biofuels Major winners in CleanTech are now starting to emerge 2010 Internet 2.0 2020

CleanTech Industries are Large, Diverse and Global Page Electricity $1.9 trillion on traditional generation Biofuels $442 billion on fuel energy spend Water $480 billion on water infrastructure sales Smart Grid $6.0 trillion on commercial and residential energy spend Storage $374 billion on peak load energy Buildings & Materials $665 billion on concrete and packaging EVs $1.1 trillion on car sales Lighting $115 billion on electricity and fixtures 2008 Spend 2008 Spend Source: McKinsey

How does the development of clean energy technologies compare to past transformations? Similarities Differences
Use Technology to transform industries that have barely changed in decades
Substantial venture capital invested in the most promising ideas
Corporate partnering is essential, as it was for biotech
The utilities are critical gatekeepers , as were the major carriers for telecom
Challenges:
Much larger scale industries
Higher capitalization requirements
Intense international competition from others who have “seen this movie before”
Opportunities:
Cross-pollination of key technologies
Greater capital availability (e.g., global funds)
Highly experienced managers and investors
Availability of outsourced manufacturing
Leading incumbents have seen successful partnering models (e.g., in pharma/biotech)

A venture capital view of Natural Gas Page
Co-fired solar thermal and natural gas to produce 24 by 7 base-load and variable power using shared infrastructure
Treatment of frac water for re-use in fracturing and other activities
Natural gas fed fuel cells and reformers for retail electricity

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Energy and the Process of Innovation

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Energy and the Process of Innovation Presentation Transcript