Daniel Englander
RockPort Capital Closes Third Fund June 4, 2008 at 7:25 AM
RockPort Capital Managing General Partner Wilber James has just announced his firm has closed its third fund. James, speaking at a keynote session of the Boston CTSI conference, said VC investing in greentech is “taking more time and more money” than was expected and that his firm is launching the fund partially to speed up exits and commercial production. Lamenting the lack of returns in greentech, James said “we haven’t had robust exits in the cleantech space…not the robust exits people expected us to have.” And, he continued, if there aren’t any serious IPOs soon, market watchers should “stay tuned. If we don’t [exit] there will be some serious corrections.”
The fund is likely to be in the $450 million to $500 million range, which would make it consistent with other recent funds such as the $500 million fund announced recently by Kleiner Perkins and Al Gore’s Generation Investment. James, who also serves on the board of Peabody Energy, pointed to the role heavy industry can play in commercializing greentech. Peabody, for example, “has more BTUs than ExxonMobil and Shell combined. And more carbon too.” The coal giant has started to hedge its regulatory bets, investing in coal gasification company GreatPoint Energy and researching carbon sequestration technologies. However, while the company’s mantra may be “coal is king,” I would argue that so was the T-Rex at one point.
An interesting point of James’s talk, and one that we’ve been batting around the GTM offices, is the role hedge funds and project finance firms can play in commercializing greentech and bringing about high-return exits. The problem here is that VCs lack the investment horizon and capital to compete at scale and at cost with the energy industrials. James argued that its unlikely a biofuels company will develop a technology, pick up $100 million in VC funding, build a pilot plant, and then raise a multi-billion dollar IPO. While this is what needs to happen, the capital markets may not be that receptive. Instead, private, non-risk adverse money is needed to bring these companies to the commercial market, extending by a number of years the time these companies take to go public. “Hedge funds,” according to James, “can play a role when we don’t have access to IPOs.”
Also at the session was Paul Dickerson, the COO of the DOE’s Department of Energy Efficiency and Renewable Energy. His boss is Karsner the Betrayer. Dickerson announced the finalization of the DOE’s $10 billion federal loan guarantee program for renewable energy projects - the largest federal allocation for renewables to date. But, as with all things related to the federal government and renewables, I’ll believe it when I see it. Dickerson said to expect an announcement next month.
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Tim Ramsey
[...] of these investors are shifting away from early stage investing to target late stage investing. Daniel Englander of GTM reported yesterday that RockPort’s new fund will have much more of a focus on later-stage investing. The [...]
[...] rise of late stage funds, such as RockPort’s new $450 million fund, may alleviate this. Though, most of those will be targeted to a small number of firms requiring [...]