An IPO or acquisition is the promised land for VC-funded startups -- but there have been relatively few cleantech IPOs over the past few years. The fact is that most cleantech companies require a longer time frame, a bigger budget, and a different set of investor skills than do IT software startups.
Most of the higher-performing IPOs in 2014 were pharma or biomedical companies, according to EY's Global IPO Trends report.
Still, in the past decade, cleantech companies such as SunPower, First Solar, and EnerNOC, and more recently, Tesla, SolarCity, Silver Spring Networks, Enphase, Control4, Opower and Vivint, have made it onto public exchanges. Biofuel startups Solazyme, Gevo and KiOR also went public, but have lost much of their shareholder value. Battery vendor A123 went public -- and then went bankrupt. BrightSource, Luca, and Enerkem filed for IPOs but had to withdraw, as did biofuel maker Mascoma. DIRTT went public on the TSX exchange, as did OneRoof Energy.
About this time last year, we made some educated guesses about which firms would go public in 2014.
Past Predictions and the 2014 IPOs
Energy Efficiency: Opower
It's nice to be right occasionally; Opower, the utility-serving home energy efficiency and behavioral modification firm, went public in April of 2014 as we predicted. VC investors included KPCB, NEA, Accel Partners, MHS Capital, Founder Collective, and Ali and Hadi Partovi. Opower currently has a market cap of $700 million and continues to grow its service offering and customer base.
Solar Finance and Installation: Vivint Solar
We predicted an IPO from Vivint's solar division, and the Blackstone-owned firm went public on the Nasdaq in September. Vivint Solar is the No. 2 solar installer behind SolarCity and has a market cap of $850 million.
YieldCos
We predicted the launch of SunEdison's TerraForm YieldCo. TerraForm has a market cap of $2.78 billion. Other YieldCos that went public in in 2014 included Abengoa Yield and NextEra Energy Partners.
Home Energy Management: Nest Labs
We predicted an IPO for Nest in 2014. Instead, Nest settled for a $3.2 billion acquisition by Google for the smart thermostat and home appliance firm with Apple Inc. DNA. VC investors in Nest included Kleiner Perkins, Google Ventures, Shasta Ventures, Generation Investment Management, Venrock, Lightspeed Venture Partners and Intertrust.
Distributed Generation: Bloom Energy
Bloom Energy continues to sell its natural-gas-fueled solid-oxide fuel cells. Its 200-kilowatt units are intended for commercial and industrial applications, and the firm boasts an all-star list of customers, including Adobe, FedEx, Staples, Google, Coca-Cola, and Wal-Mart.
But despite GTM's prediction and the prediction of Bloom board member Scott Sandell of NEA, the firm did not go public in 2014.
Bloom has raised more than $1 billion in venture capital over a decade from investors including GSV Capital, Apex Venture Partners, DAG Ventures, KPCB, Mobius Venture Capital, Madrone Capital, NEA, SunBridge Partners, Advanced Equities, and Goldman Sachs. Bloom is Kleiner Perkins' first cleantech investment and, at more than twelve years old, an old maid in VC years.
Can Bloom withstand the scrutiny of an S-1 and public offering in 2015, or does Bloom's future lie in a less revelatory acquisition by a global strategic like GE or Siemens?
Solar Finance: Sunrun
Sunrun helped originate the residential solar financing idea and can be viewed as "SolarCity without the trucks."
Residential solar is the only U.S. solar segment that has grown consistently with no seasonal booms or lapses over the last few years. The U.S. market exceeded 300 megawatts in a quarter for the first time in history in Q3, while installation costs continue to fall.
And as with market leader SolarCity, we anticipated a public offering for Sunrun. But here's Sunrun CEO Lynn Jurich's take:
"I’ll be upfront. One of the things I would say is that we, in our last private funding, raised more capital and had a higher valuation than SolarCity’s IPO. I think a lot of people look at an IPO as the endgame. It’s not. It’s just a financing." Jurich said she believes Sunrun has the most effective capital structure, adding, "We believe that our current capital structure, the way we’re financing, is the most efficient. We’re watching the securitization. Certainly, it’s great to see innovation happening, but we believe that our current program offers a lower weighted average cost of capital."
All in all, our 2014 IPO predictions were better than what dart-throwing monkeys might do.
Other IPOs
TCP International, an LED and CFL lighting firm, went public on the NYSE in June. Aspen Aerogels finally got through the IPO window with its high-performance insulation, while Intelligent Energy and its fuel-cell aspirations went public on the AIM. Solar PV microinverter maker Enecsys went public on the AIM as well. OneRoof went public on the TSX Exchange through a reverse merger.