The Ideal “Green” Business Plan: A Venture Capitalist’s Perspective Presentation at the BYOB Spring 2011 Po Chi Wu, Ph.D. Adjunct Professor HKUST Spring 2011

What is business planning? On-going process Why write a business plan? Who will read it? Why will they read it? After reading it, what will they do? After feedback, how will your plan change?

“Green” Businesses How are “green businesses” different? More stakeholders More complicated - multi-disciplinary Longer-term More costly Different investor mentality Higher uncertainty (of ROI), higher risk

What is “Ideal”? Powerful, inspiring Vision & Mission Experienced, committed TEAM Outstanding “partnerships” Proprietary tech/business model Strong government support/alignment Patient investors Solid Resources, Processes, Values

Top Sectors in 2010 Solar accounted for 24% ($1.83 billion) of total Transportation (17%, $1.35 billion) Energy Efficiency (14%, $1.05 billion). Measured by number of deals, was most popular sector (21% share, 151 deals) followed by Solar (16% share, 117 deals). N. America accounted for 68 percent of total invested, 21% for Europe & Israel, 10% for Asia

US VC Investment in Cleantech 2010 US VC investment reflected a turning point in the industry due to improving credit and capital markets, the deployment of stimulus spending and increasing corporate cleantech adoption Increased by 8% to $3.98B in 2010 from $3.7B in 2009 and deal total increased by 7% to 278

Investments by Segment Energy/Electricity Generation segment - $1.32B in 2010 Solar increased by 77% to $1.58B In Q solar investments reached $279.17M Largest - Abound Solar, Fort Collins, CO, provider of photovoltaic modules, raised $111.18M SoloPower Inc. of San Jose, CA, a solar cell developer, raised $51.57M Industry Products and Services - 79% year on year increase, raised $1.24B through a total of 80 deals in 2010

Investments in 2010 In 4Q - $355.84M, including $100M in Elevance Renewable Sciences Inc., of Bolingbrook, IL, a provider of specialty chemicals derived from natural oils, and $80M in SAGE Electrochromics Inc. of Fairbault, MN, a provider of electrochromic smart window products Electric vehicles (EV) and charging stations - $695.17M, e.g., $350M in Better Place, Fisker Automotive, and Coda Automotive, Inc. EV coalescing ecosystem: utilities, big box retailers, rental car and battery storage,”e.g., Panasonic invested $30 M in Telsa Motors.

Investments in 2010 Energy Efficiency segment dropped 9% from 2009 to 2010, to $ million through 68 deals In Q4, OPOWER, Inc., of Arlington, VA, an energy consumption technology provider raised $50M Seed stage – $477M in 18 deals, averaging $26.5M each (8 in 2009) Second rounds accounted for $1B

Exits in 2010 Globally, cleantech IPOs raised $16.3B for 93 companies China accounted for 68% (63) of the IPOs completed and 61% ($10.0 billion) of the total amount raised China Goldwind, the Xinjiang-based wind turbine manufacturer raised $917M on the Shenzhen Stock Exchange 3 IPOs in US: Amyris, Tesla Motors and Codexis, Inc. M&A totaled an estimated 716 transactions in 2010, of which totals were disclosed for 203 transactions totaling $36.0 billion

Issues to Watch Out for… Over-optimistic, idealistic (wishful) thinking Timing Alignment People (cross-industry culture) Financing model (payer/beneficiary) “Resistance” Accelerating rate of change – driven by China

How to Proceed? Comprehensive preparation to understand complexity Extensive networking – cultivate relationships “Problem-solving” => “innovation” in all domains PASSION & CURIOSITY MUST GROW

Hot Trends for Sustained worldwide VC investment 2. Venture capital will continue to cede importance to corporate and non-institutional capital 3. A return to early stage venture investments 4. Energy efficiency emerges as the clear rock star of cleantech 5. Biofuel investment could reach former highs

Hot Trends for Nuclear surprises, but not in U.S. 7. Recycling and mining will attract more investment 8. Natural gas emerges to threaten solar and wind for utility renewable power generation 9. China becomes the most important market for cleantech: if you're not selling in China, you won't matter Source: net.com/articles/2010/december/3/predictions-for- cleantech-in-2011.aspx