VC Investment in Clean and Alternative Energy – Q3

The recent data from the Venture Power newsletter shows Fuel Cell investments totaled $243 million YTD, up from $100 million in 2005. This growth figure is misleading though- the investment into Ion America by Kleiner Perkins Caufield and Byers, Mobius and NEA for $103m skews the growth by a wide margin. However, Fuel Cells investments have still shown a healthy 40% growth rate. There were 14 investments in total, including London Seed Capital’s investment into Fuel Cell company, Bac2. Other sub sectors showed 50%- 100% investment growth, which does look like (irrational?) exuberance…

Our investment into Bac2 was for more than their fuel cell technology though. The company’s electrically conductive polymer is an enabling technology and has applications in aerospace, electronics and the semiconductor industry in addition to Fuel Cells. Bac2 is a great example of the type of investment opportunity that I find very compelling: a binary investment in a company targeting a billion dollar market initially, with secondary applications in large markets where you can still make substantial returns.

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