Yellowstone Capital Partners said Wednesday it is launching a $50 million alternative- and renewable-energy fund.
The fund is quite a jump in investment dollars when compared to the Houston-based firm's first greentech fund, which closed at $10 million in 2005. Since then, Yellowstone said it has supplemented the fund with an undisclosed amount of money raised from co-investors.
With the firm's first fund expected to be depleted sometime this year, Rick Owen, Yellowstone's managing director, said it was time to start a new one. The second fund, like its first, will focus primarily on early stage investments in energy technologies like solar, storage, wind, clean coal, nuclear and alternative fuels.
Yellowstone is currently an investor in companies including solar-concentrating startup SolFocus. The company, a Palo Alto Research Center spinoff, uses small lenses and curved mirrors to concentrate sunlight and direct it into solar cells.
In November, SolFocus raised $11.6 million from an unnamed hedge fund, bringing its total investment to $95.6 million.
Yellowstone has also invested in thin-film solar developer Heliovolt, which recently announced a location for its first manufacturing facility.
Outside of solar, additional bets by Yellowstone include fuel-cell developer Protonex Technology. Yellowstone is hoping for an initial close on its second fund early this year.
"Being in Houston, we are more or less energy guys," said Owen about where the firm is placing its bets. But one new area Yellowstone might take on is clean-water technology, he said.
Yellowstone's latest fund joins a slew of other private-equity money pots focused on green technology that have taken root over the last 12 months.
But some industry watchers have questioned whether enough good investments are available to justify all the capital being raised by private-equity firms. A study earlier this year by New Energy Finance found that VCs were able to invest just 73 percent of the funds they had raised and had not been able to spend $2 billion of the money they had available.
And the record-breaking amount of money venture capitalists poured into cleantech last year created a trend of pushing more investments toward earlier-stage companies, which is the exact stage Yellowstone is focusing on.
"We do see a lot of competition," admitted Owen, noting that more private-equity players are entering the hunt for new and innovative cleantech companies.
But Owen said Yellowstone believes there is still plenty of opportunity.