Michael Kanellos
The Secret Ingredient for a Successful Greentech IPO July 2, 2008 at 3:43 PM
What does a company really need to pull off a successful IPO in the greentech market?
Time.
Think of it. SunPower, the solar panel maker that had one of the first successful IPOs in the green market in 2005, was founded by Dick Swanson in 1985. First Solar, the sizzling maker of cadmium telluride solar panels, went public in 2006. The company, however, can stretch its history back to the 1980s.
And today Energy Recovery Inc., which makes equipment that makes sea water desalination more energy efficient, held its IPO. The shares went out at $8.50, at the high end of its stated $7 to $9 range, and spent most of the day trading above $10. It closed at $9.83. That’s a 16 percent gain during the middle of one of the bleakest periods in years for public offerings and the stock market in general. Not a bad accomplishment.
Energy Recovery was founded in 1992, 16 years ago. (Read here for more on the company’s history and financials.)
To put all of this another way, Energy Recovery was founded when Bill Clinton was a long shot to get elected President and David Lee Roth was filling stadiums when First Solar and SunPower were getting off the ground.
The long burn times for these companies underscore the fact that it can take quite a significant amount of time to fine-tune technology for this market. We’re talking industrial processes here and customers are naturally quite skittish.
Alain Harrus, a partner at Crosslink Capital, also notes that the concern about energy consumption is quite new.
“They were blazing a trail when there was no trail,” he said. Now that the the problems and opportunities are better understood, companies will likely be able to get to market quicker.
There is also another interesting connection between these three companies. U.S. VC firms didn’t participate much in their development. FIrst Solar was funded largely by a member of the Walton family. Energy Recovery had backing from a Norwegian VC. The company looked for funds in the U.S. for a while but decided to go public instead. (Harrus said he looked at the company and liked it.) SunPower was reinvigorated and started its climb to the top with an investment from Cypress Semiconductor in 2002.
It’s nice to know that the world will still spin if Kleiner, Perkins closes tomorrow.
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