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Presented by Stephan Dolezalek of VantagePoint Venture Partners, April 8, 2010 at the Spring 2010 Energy Management and Innovation Center, McCombs School of Business, The University of Texas at Austin
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Energyand
The Process of Innovation
Stephan DolezalekVantagePoint Venture Partners
April 8, 2010
Page 2
VPVP CleanTech Portfolio
Electrificationof Transport
Energy Storage
Grid Management
LED Lighting andBuilding Efficiency
Power Generation
Bio-chemical
Waste to Energy
Silicon Film Photovoltaic Cells
Senergen Devices, Inc.
Solid oxide fuel cellLi-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 bulbLED arrays
Utility-scale solar thermal
Municipal waste conversionWastewater recoveryEnergy from Black Liquor
CIGS panels BIPV 3rd generation solar cells
High efficiency windows
Bio butanol Algal biofuelsCellulosic ethanol
LED wafersNext-gen LEDsDigital Controls
Next-gen turbine design
Page 3
Global Strategic Partners
(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 6th wave)
What it takes to build one transformational companyINVENTION AND
INNOVATION
ENTREPRENEURSHIP
GROWTH CAPITAL
MANAGEMENT
PARTNERSHIP
EXECUTION…..
$valuation
Page 6
1990’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’thave to
give up ona good
salary to getthese stock
options do I?
I wanteverythingthey wantand I don’tneed muchto pay the
rent and for food
Page 7
Res
ultWell 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
Page 8
So how did we get from here…
Page 9
To here (in less than 5 years)?
Now Everyone has an Electric
Page 10
2005 2006 2007 2008
VPVP invests in Tesla Motors
GM begins working on
the VoltGM’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
Example of rapid industry transformation 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.”
20042003
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 11
Try to buy one of these recently?
Remember how hard TV manufacturers fought the requirement to cross overto digital broadcasting; saying customers would never switch in time?
LED’s are changing more than just TV
Page 12
Moore’s law for Lighting – Haitz’s Law
Page 13
Page 14
0
50
100
150
0
1,000
2,000
3,000
$4,000
2004 2005 2006 2007 2008 2009
Number of LCD TVs shipped(Bars)
ASP of a 32 inch LCD TV(Line)
0
500
1,000
1,500
0.00
1.00
2.00
$3.00
2004 2005 2006 2007 2008 2009
First Solar capacity MW(Bars)
First Solar cost/watt(Line)
Costs Decline as New Technologies Achieve Scale
Source: DisplaySearch; First Solar company website
LCD Televisions Solar PV
Fresh off this morning’s press
Page 15
LED’s meet SolarInnovation Merges Light Absorption and Generation
Page 16
Page 17
1879: Edison incandescent light bulb
Modernization is the Ultimate Driver of Change
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 19501875 1900
The Stone Age Didn’t End Because we Ran Out of Stones
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 1996 – 100M mobile phones globally 2000 – 740M mobile phones globally 2010 – 4.6B mobile phones globally
We’ve seen this movie before:Technological innovation yields better and cheaper ways of doing things
Page 18
0
100
200
300M
1998 1999 2000 2001 2002 2003 2004 2005
Number of U.S. Subscribers
Landline
Mobile
0
10
20
30M
2000 2001 2002 2003 2004 2005 2006 2007 2008
U.S. Camera Sales
Film
Digital
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 20001980
Perso
nal
com
pute
rs
Software
Networki
ng
Biotec
h
Inte
rnet
Win
dSol
ar (P
V)
Elect
ric v
ehicl
es (E
Vs)
EV infra
stru
ctur
eSol
ar-th
erm
alSm
art g
ridPow
er s
tora
geBio
fuel
s
Major winners in CleanTech are now starting to emerge
2010In
tern
et 2
.0
2020
Page 20
CleanTech Industries are Large, Diverse and Global
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 22
•Co-fired solar thermal and natural gas to produce 24 by 7 base-load and variablepower using shared infrastructure•Treatment of frac water for re-use in fracturing and other activities•Natural gas fed fuel cells andreformers for retail electricity
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