Executive Summary 5

Introduction to Venture Capital 7
Basics of VC Financing 7
SEED: What It's All About 9
Advantages to Venture Capital Funding 10
Disadvantages to Venture Capital Funding 13

Industry Background 16
Non-US VCs 17
Emerging Alternatives to VCs 19

Types of VC Firms 21
Corporate Venturing 22
VC Investment Targets 23

World VC Investment Markets 24
United States 24
Global 30
Current Trends 32
Expected Trends 35

VC Investment in Energy 40
History of Energy Venture Capital 40
Role of Venture Capital in the Energy Industry 43
Energy Technology Market Today 44
Issues Driving Energy Sector Investments 46
How Energy Investing Is Different 51
Factors Influencing Energy VC Returns 52
Requirement for VCs: In Depth
Knowledge of the Energy Space 55
Restructuring of the Global Electric Power Industry 56
Strategies of Energy Venture Capital Companies 59
Future of Energy Ventures 62

Investment Trends and Growth Drivers 64
New and Renewable Energy Technology 75
Worldwide Growth 78
Legislative Support for Clean Energy 90
Direct Public Funding 90
Strong Local Research Communities 91
Strong Local Entrepreneur Network 91
Links with a Mature Venture Capital Community 91

Receiving VC Funding 93
Types of Venture Capital Financing 93
Candidate Selection and Portfolio Criteria 104
Major Energy Investment Sectors 107
How Much Investment is Made? 109
Investment Process 110
VC Valuations 112
Exiting a VC Investment 117

Outlook for Energy Venture Capital 118
Challenges of Investing in Energy
Technology 120
Role of Government 123

VC-Funded Energy Sectors 124
Biofuels 124
Coalbed Methane/Coalmine Methane 124
Fuel Cells 125
Hybrid Electric Vehicles 128
Solar Energy 129
Wind Power 130

Profiles of Major VC Investors 131
Altira Group 131
ARC Financial Group 133
Aret Corporation 134
Battery Ventures 137
Braemar Energy Ventures 140
Chrysalix Energy Management 143
EnerTech Capital 148
GFI Energy Ventures 150
Haddington Ventures 158
Hydro Quebec CapiTech 160
Nth Power Technologies 161
Pangaea Ventures 164
Prospect Capital Corporation 166

Other VC Firms 169
ACCERA Venture Partners AG 169
Advantage Capital Partners 170
Advent International Corporation 171
Angeleno Group 172
BankInvest Technology 173
Blue Hill Partners 174
Carbon Trust 175
CDP Capital - Technology Ventures 176
E2Venture Fund 178
Endeavor Capital Management 179
Energy Ventures Group 180
Expansion Capital Partners 181
FA Technology Ventures 182
FE Clean Energy Group 183
GE Commercial Finance Energy Financial Services 184
Hydrogenica Partners 186
Hydro-Quebec Capitech 187
Insight Venture Partners 188
Kinetic Ventures 189
Koch Genesis 190
NGEN Partners 191
Norsk Hydro Technology Ventures 192
OPG Ventures 193
Perseus 195
RockPort Capital Partners 196
RWE Dynamics 198
Schneider Electric Ventures 199
Sustainable Energy Ventures 200
Ventures West 201
Yaletown Venture Partners 202
Yellowstone Capital Partners 203

Case Study of a VC Project 204

Venture Capital Resources and Organizations 206
National Venture Capital Association 206
Brazilian Venture Capital Association 207
British Venture Capital Association 208
Canadian Venture Capital Association 209
European Private Equity & Venture Capital Association 210
French Private Equity Investors Association 212
Italian Venture Capital and Private Equity
Association 213
Swedish Private Equity & Venture Capital Association 214
Other International Venture Capital Associations 215
Online Venture Capital Resources 216

Appendix 218

Glossary 223

About the Publisher 235


List of Figures and Tables


Figures

Figure 1: US Energy VC Investments, 1990 - 2004 (in US$ Million) 30
Figure 2: US Energy VC Investments as a Percentage of total US VC 30
Figure 19: Framework for Analyzing the Suitability of CVC as a Form of Corporate Venturing 218
Figure 20: Linkages of CVC Unit, the Parent Company and the External World 219
Figure 22: Average US Investment per Energy VC Deal 1997-2004 (in US$ Million) 220
Figure 23: Number of US Energy VC Deals per Year 1997-2004 220
Figure 24: Market Opportunity for Energy Technology Segments 220
Figure 25: US VC investing in Energy Technologies by Subsector 2004 222
Figure 26: Distributed Energy Investments (1998 - 2004) 222
Figure 27: Energy Intelligence Investments (1998 - 2004) 222
Figure 28: Power Reliability Investments (1998 - 2004) 222


Tables

Table 2: Investor Ranking by Number of New & Renewable Energy Technology Portfolio 77
Table 3: European Corporate Venture Capital Funds Active End of 2003 98
Table 1: Venture Capital Investments 109