Energeia Ventures seed/early stage cleantech fund concept

1. Energeia Ventures
Transforming Potential into Reality
Investor Presentation
Energeia: (en-air-(zh)YEE-ah)
The Greek word for Energy, literally meaning “being at work.”
In Aristotle's philosophy: “the activity that transforms potentiality into actuality.”
Energeia Ventures - Confidential
March, 2011

2. Energeia Ventures Overview –
An early stage vehicle for new energy investing
 Seed and early stage investments in emerging energy technologies
 Bridge the seed stage funding gap
 Hands-on investing
 Engaged with research organizations and independent entrepreneurs to navigate through the
technology and business validation phase
 Early company building support at the commercial/go-to-market stage
 Experienced team of start-up operating executives to help build and grow portfolio companies
 A focus on disruptive technologies which would be complementary additions for platform,
systems and utility-scale companies
 Short time to proof of concept/prototype, commercialization and revenue
 Alignment with strategic partnerships early in the go-to-market phase to drive a shorter time to exit
 Targeting $50 million fund or focused alternative investment vehicle
 Seed rounds of $250,000 to $750,000
 Follow-on participation of $1 to $5 million to maintain ownership position
 Small enough to be hands-on at the early stage, large enough to participate in subsequent rounds
 Looking to partner with strategic investors with direct interest in energy development,
investment and commercialization
 Individuals or family offices with energy-related interests
 Corporate investors interested in emerging technologies
 Universities with strong energy R&D and technology transfer organizations
Energeia Ventures - Confidential 1

3. Investment dollars continue to flow into energy
But a serious funding gap at the seed/early stage
Global New Investment in Sustainable Energy, 2002-2008 VC/PE new investments by stage, 2008 and growth on 2007
($ billions) ( $ billions)
 Tremendous activity in clean energy  A sizeable “funding gap” exists at the Seed and
venture and private equity investing Series A stage for venture capital
going after the large market opportunity  The “Valley of Death” mentality is pervasive - A lack of seed/early
 Extremely large, global industry of importance – stage capital needed to bridge from R&D through prototype
global warming, sustainability, energy independence development to commercialization-ready business
& security, etc.
 Increasing government regulation, mandates and  A perception that energy investments require too much time and
subsidies fueling industry dynamics money to meet venture capital returns expectations
 New, alternative energy sources and technologies  Technology and business validation required before traditional
 IPO and later stage equity investments fueling the institutional investors are willing to risk capital in early stage
growth and scaling of successful ventures cleantech
 Legacy players placing bets on new technologies via  Exacerbated by the fact that numerous university and lab
M&A sponsored research projects lack commercialization mindset to
 Emerging consolidators making bets with early-to- get them to the “investment ready” stage
mid stage companies
Source: New Energy Finance: Global Trends in Sustainable Energy Investment, 2009
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4. Requires coordination from seed to exit
Via a team with deep early-stage experience
 Access to deal flow via key relationships
 Built strong ties with Entrepreneurs, Universities, Labs and other VCs
 Sourced more than 100 energy-related deals in 2009
 An eye for identifying technologies with near-term applications and modest capital requirements
 Developed core technology and launched or positioned dozens of new technology products
 A hands-on investment approach, shepherding early-stage companies from invention to viability
 Drove development of business models and business plans for many products and companies
 Built strong management teams and active boards at more than a half-dozen companies
 Instilled milestone-driven management in engineering, marketing and sales teams in high-growth
businesses
 Leverage relationships with both customers and strategic buyers
 Built partnerships with leading high-tech companies: Intel, IBM, Broadcom, Cadence, Synopsys,
Symantec, etc.
 Emerging relationships with leaders & consolidators in energy sector: GE, IBM, Siemens,…
 Drive attractive exits with strategic industry players
 Managed exits totaling >$1.5B with Ariba, Dassault, MatrixOne, Conexant Systems
 Found productive deals for technologies and companies that did not warrant continued stand-
alone funding
Structuring the timing, sequence, size and valuation in coordinated
fashion to build companies and maximize returns on a small investment
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5. A focus on complementary energy technologies
Across the energy value chain
Supply Demand
Utility-Scale/Systems
Generation & Transmission, Buildings & Homes, Devices, Transportation
Alternative Fuels Distribution & Smart Grid Energy Efficiency & Storage
& Infrastructure
• Oil& Gas Exploration • Infrastructure • Building Management • Electric/Hybrid Vehicles
• Clean Coal • Cabling • Efficiency/ESCO Services • Fuels
• PV Panels • Production manufacturing • Demand Response • Engines
• CSP Solar Plants • Network Deployment Platforms • Batteries
• Wind Turbines • Grid-scale storage • Smart Homes • Flywheels
• Geothermal Discovery • Service businesses
• Marine • Insulation material
• Biofuels production
• Measurement, Monitoring
• Processimprovements & Controls • Software & data • Usage monitoring
and components • Advanced Metering platforms • Materials
Sub-Systems/
• Advanced Materials • Communication • Advanced Monitoring • Advanced LED
Components
• Sensors and Controls technologies Devices • Semiconductors
• Management software • Communication
• Materials technology
• Equipment & devices
• Energy trading platforms
• Charging schemes
Research
• Advanced chemistry • New grid architectures • Next
generation building • Nano Wires
Basic
• Spectral splitting materials
“Component level” investments which are capital efficient and lead
to attractive, strategic exits in a moderate time frame
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6. Bridging the Funding Gap
Moving from invention to viable businesses
“The Cradle of Death”
 Economists have argued for early-stage technology development (ESTD) resources to aid in crossing
the “Darwinian Sea” (or “Cradle of Death”) and, later, the “Valley of Death” funding gaps.
Entrepreneurs strongly agree
 Venture Capital presently funds only 4% of these seed or pre-first stage investments
 Much of this funding is expected to come from corporations, government or angel investors
 Unfortunately, much of these government funded “science projects” will never reach commercialization
 Capital is not the only missing element to successful technology development, but knowledge and
experienced human resources are also needed to drive technology through market adoption to scale
Energeia Ventures intends to close that gap via dedicated seed/early stage funding
along with hands-on, market and technology savvy professionals
Source: Between Invention and Innovation: An analysis of funding for early stage technology development, Lewis M. Branscomb and Philip E. Auerswald, 2002
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7. Hands-on support to launch & build companies
Early stage technology development through market
Basic Concept/ Early Stage Technology Product Market Growth &
Exit
Research Invention Development (ESTD) Development Entry Scale
 Technology validation
 Evaluation of fundamental viability and suitability for product development
 Develop understanding of clear product specifications and total system requirements
 Customer validation
 Meaningful feedback on solving real pain points and determining customer value
 Leverage network of would-be users
 Business model development
 Technology founders often need help arriving at a model that maximizes value
 Understand clear economic value proposition, sources of revenue streams, cost structure and capital requirements
 Team recruiting
 Adding the right people at the right time to grow in a capital-efficient manner
 Development strategy
 Leveraging partnering, outsourcing and direct hiring to achieve the most efficient development approach
 Go-to-market and growth strategy
 How and when to engage the market as the products and the company develop
 Posturing for exit
Life-cycle value based on the partners’ years of technology operating experience
Source: Between Invention and Innovation: An analysis of funding for early stage technology development, Lewis M. Branscomb and Philip E. Auerswald, 2002
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8. Sources of Deal Flow
Access to quality ideas & entrepreneurs
Sources of Start-up Investment Energeia Ventures Differentiation
Opportunities
 Entrepreneurs  Long-term, personal relationships and
 Active network of high tech and clean tech advisory roles with key constituents
individuals, frequently vetting new ideas
 Clean Energy Fusion Center/NECEC Fellows  Participation in related events – business
plan competitions, etc.
 Formal mentor in business plan competitions
 Universities  Mutual benefits from access to seed/early
 Key labs & professors; Tech Transfer offices stage capital and expertise
 MIT, Harvard, UMass, UNH, Maine, etc.  Hands-on value even before the first dollar
 Government Labs of seed investment
 Source of new technology, IP and information on  Tenacity and approachability on the part of
emerging opportunities the investment team to work the network
NREL/DOE, Fraunhofer Institute

 Overall seen as a missing and valuable
 Potential customers, strategic investors and element to build important energy
would-be acquirers technologies
 Network of larger energy companies and
corporate customers
 Angel Investors and Venture Capital Firms
 Network of A & B round investors
 Working relationship with several cleantech-
focused angel groups
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9. Sample Current Pipeline
We are already working with a number of pre-funded companies in some capacity
which we feel might be ready for seed capital
Sector Summary Source Stage
Smart Grid/ Grid mediation & financial recognition services for electric vehicle ICE Business Plan Business Model
EVs owners Competition Development
Smart Grid Electricity pricing analysis & management software. ISO to ISO MIT Technology Validation
trading exchange platform
Smart Grid A home automation communications platform Entrepreneur Business plan development
network
Smart Grid SaaS-based tool for enabling utilities to evaluate various data NECEC Fellowship Business plan development,
sources before distributed energy can be incorporated partnering,
Energy SaaS-based energy efficiency program management solution for NECEC Fellowship Pre-Launch
Management utilities
Battery External dynamic control system offering 25% improvement with The Cleantech Lab validation, business
Technology existing battery technology Open mentee plan development
Testing Real time measurement of cell composition and thickness in the MIT/ICE Business Technology Validation
manufacturing environment Plan Competition
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10. Filling the funding gap in energy investing
Meeting a market need and partnering with later stage investors
Energeia Ventures is uniquely positioned to fill the seed & early stage funding
gap for energy investments in the greater New England market
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11. Targeting a set of strategic LPs
Recognizing a creative approach is needed as a debut fund
Energeia Ventures is targeting LPs who seek exceptional returns and
have an interest in the large and emerging energy sector
 Family Offices aligning investments with a Investor Attitudes to First-Time Cleantech Funds
sustainability agenda
 Corporations fostering innovation in energy
technology with desire to have early access to
future partnerships and acquisitions in the sector
 Successful individuals in the energy sector who
desire to continue to invest in the sector
 Universities with strong energy research
capabilities, an active technology transfer office
and a mission for technology commercialization
 Select Fund-of-Funds who support early stage,
renewable energy and first-time funds
 85% of surveyed LPs indicate interest
Source: Preqin Special Report: Private Equity Cleantech, June 2009
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12. Would-be Stand-Alone Fund Outline
 $50M seed/early-stage venture fund
 Small enough to maintain a true seed-stage focus in capital-efficient companies
 Large enough to maintain a meaningful position in each investment
 Total Energeia investment of $2-5M per deal
 Invested over 2-3 rounds
 Seed rounds of $250,000 to $750,000, for proof-of-concept and market validation
 Series A rounds of $1 to $5 million, to maintain pro-rata share. Will typically co-invest
 Some participation in Series B as required
 15-20 investments over 5 years
 3-4 new deals per year
 Traditional fund structure
 10 year term
 2% average annual Management Fee
 20% Carried Interest
…but given the current fund raising realities, we are looking for creative
funding and partnering approaches to pursue identified deal flow
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13. Contact
Brad Hafer
General Partners
Energeia Ventures
brad@energeiaventures.com
+1-781-856-7978
Clean Energy Fusion Center
470 Totten Pond Road, 3rd Floor
Waltham, MA 02451
www.energeiaventures.com
www.cleanenergyfusion.com
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