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27

May

2011

NVCA CleanTech Policy Roundup PDF Print E-mail

Emily Baker

Written by Emily Baker   
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The last month has been a busy one for the NVCA Clean Tech public policy team as we have provided meaningful input on a number of critical issues on Capitol Hill.  The following summarizes some of the highlights:

Update on CEDA

The Senate Energy and Natural Resources Committee held a hearing in support of the Clean Energy Deployment Administration on May 3rd.  In her opening statement, Ranking Member Murkowski (R-AK) reminded Senators that last year CEDA passed the committee with broad, bipartisan support and she called CEDA a “smart way for the federal government to promote renewable energy.” She further stated that “there is a legitimate role for the federal government to play in this area.” 

Enacting a Clean Energy Deployment Administration could be one of the first energy initiatives that the Senate brings to the floor this year. The main obstacle to passage will be finding offsets to fund the initial $10 billion that CEDA requires.  NVCA has long supported CEDA and was asked to provide written testimony for the record.  NVCA Board Member Ray Rothrockof Venrock submitted testimony on our behalf. 

Just yesterday CEDA was scheduled to be marked up in the Senate Energy Committee. Usually this is the last step before a bill passes the committee.  Unfortunately, Chairman Bingaman and Ranking Member Murkowski decided to postpone marking up CEDA, until after Memorial Day, presumably to take the time to build bi-partisan support.

Also last night the environmental groups came out against CEDA, consistent with previous efforts.  They are pointing to a flawed belief that nuclear energy will be the main beneficiary of a CEDA.  Last year, these groups were not effective in their arguments and we are hopefully the same will hold true this time around.  NVCA will be meeting with Senate staffers next week on CEDA and hopefully it will move after Memorial Day.

“Thank You” Letter to Congress on ARPA-E

After successfully getting Congress to include funding for APRA-E in the FY 11 budget that recently passed, NVCA led an effort to thank lawmakers for including ARPA-E in the hard-fought budget.  ARPA-E enjoys support in the Congress but when the budget battles come down to the wire and targets must be met, it is easy for lawmakers to drop programs.  Since APRA-E is a newer program it could have easily been targeted for funding cuts.  Our lobbying efforts are well underway to secure funding in FY 12. 

National Summit on Advancing Clean Energy Technologies

NVCA participated in the National Summit on Advancing Clean Energy Technologies held last week in Washington, DC.  The event, organized by the Bipartisan Policy Centerand the Howard Baker Forum and Lawrence Livermore National Laboratory, brought together energy technologists, venture capitalists, industry executives and public officials to develop a road map and guidance for clean energy entrepreneurs and technology companies interested in accessing the national laboratories.  NVCA hosted a panel on the Role of Private Financing in Commercializing Advanced Energy Technologies, with Bob Nelsen of Arch Ventures, Tom Baruch of CMEA, and Scott DePasquale of Braemar Energy Ventures.

Comments on Senate White Paper on the Clean Energy Standard

Senate Energy and Natural Resources Committee recently asked the NVCA to provide input to a Clean Energy Standard (CES) White Paper to which we responded by marshaling the resources of a group of clean tech investors at member firms.  We were pleased to have the opportunity to offer the venture viewpoint on this issues which reflect the belief that clean energy is one of the largest opportunities of the 21st century and that whichever country is the leader in innovating the best energy technologies, will be the global economic leader as well. You can view the executive summary of our submission here

We continue to be heartened by the demand for the venture capital perspective on clean tech policy issues and will continue to take our seat at the table as these and other issues are discussed and moved forward.

 

25

May

2011

NVCA Testifies on Life Sciences Issues PDF Print E-mail

Mark Heesen

Written by Mark Heesen   
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This morning I testified before the Joint House-Senate Economic Committee (JEC) on “Driving Innovation and Job Growth through the Life Sciences Industry”.  The JEC is one of the few joint committees comprising members of both the House and the Senate and is chaired by Senator Bob Casey (D-PA) of Pennsylvania. 

My testimony, delivered on behalf of the NVCA, focused on how venture investment fuels life sciences start-ups and included recommendations on how policy makers can continue to help protect these emerging growth companies.  Specifically Congress must:

  • Support a tax policy that rewards long term investment in innovation
  • Protect future sources of capital for the venture industry
  • Encourage more small-cap IPOs
  • Implement health reform that promotes innovation
  • Support broad-based FDA reform
  • Continue to fill the R&D pipeline through funding of basic research
  • Embark upon legal immigration reform
  • Protect small innovators through patent reform 

We were pleased to be able to have the opportunity to share the venture industry’s most pressing issues with the JEC.  Committee members were particularly concerned about the stalled SBIR bill and its impact on innovation.  Also, the hearing was an opportunity to educate members on the fact that R&D tax credits typically do not directly help small, emerging growth companies because these companies are not yet profitable.  The holding of this hearing itself is evidence that the JEC understands the importance of life sciences to both the US economy and our global competitiveness and we look forward to continuing to contribute to the conversation as policy is shaped.

 

18

May

2011

Venture Capital Performance Continues to Improve PDF Print E-mail

Mark Heesen

Written by Mark Heesen   
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This morning, the NVCA released the Q4 2010 venture capital performance numbers from our partner Cambridge Associates and the news continues to be encouraging.  As you can see in the press release, venture returns improved at the end of the year in nearly every time horizon, marking the second consecutive quarter in which we saw meaningful increases.  

Based on current exit market activity, we feel that the venture industry is on a steady, upwards trajectory rather than experiencing a quarterly blip.  In other words, barring any unforeseen market dynamics, returns hit bottom last year and are headed back up.  Still, we do have a ways to go before the venture industry can boast the type of performance that compels limited partners to expand their venture capital allocation beyond what it is today.

While we typically discourage analysts from reading too much into the one year numbers, the figure is a good measure for recent exit activity.  At the end of 2010, an opening of the IPO market and quality acquisitions brought the pooled industry 1-year performance number into positive, double digit territory.  The first quarter of 2011 is showing a similar pace.

More detailed information is available and we encourage those interested to review the full Cambridge report which details performance by vintage year and industry.

 

16

May

2011

The Monday Meeting with Jason Matlof PDF Print E-mail

Emily Mendell

Written by Emily Mendell   
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This month's Monday meeting is with Jason Matlof of Battery Ventures.  Jason joined Battery in January 2005 and focuses on investments in the clean technology sector. He is currently a board member at Redwood Systems, SolarBridge Technologies, Qteros, and Ideal Power Converters (Observer). Before joining Battery, Jason spent more than a decade in management roles at leading technology companies. Most recently, he served as Vice President of Marketing and Business Development for Neoteris, which was acquired by NetScreen and then subsequently acquired by Juniper Networks. At Neoteris, Jason was responsible for developing and executing the company’s product strategy and establishing leadership within the emerging SSL VPN product category.

Prior to Neoteris, Jason spent five years at Cisco Systems, where he led the product management team for the company’s multi-billion dollar family of fixed-configuration Catalyst switches. Jason has also held positions with Ford Motor Company, Ericsson Raynet Corporation and MPR Associates. Jason received a BA with honors in Political Science from the University of California, Los Angeles and an MBA from Harvard Business School.

Jason co-authors www.cleanmakesgreen.com, a blog focused on cleantech.

Jason_Matlof_Battery_2

Jason Matlof, Partner, Battery Ventures

Q.  From which industry sector do you think we will see the most innovation in the next 2 years?

A.  Cleantech, for sure. The first generation of Cleantech investing has been challenging. Capital intensity, scale up, science risk, and other things are just a few of the big learnings of “Cleantech 1.0.” But, the opportunity to generate great venture returns is still significant.  These are the biggest product markets in the world; they suffer from acute economic and political challenges; and, technology is the answer in most cases.  Those are challenges where technology entrepreneurs and venture investors do well.

Q. 2011 is the year of the ...

A.  The Solar Microinverter. Enphase has done a great job building this new product category and is growing wildly fast.  But, this is the just the beginning.  There are a number of great solutions coming to market that will only accelerate the value proposition and growth potential.  Keep your eyes open in 2H11.

Q. The biggest threat to the US venture capital industry is ....

A.  Returns!  The venture industry’s mean average returns have been poor for over a decade. If the industry intends to maintain size or even grow, the industry mean returns need to start growing dramatically.  That means we need new product categories, driving new value propositions, and that drive new categories of strategic buyers to create exit opportunities for our portfolios.  Can you say “Cleantech”?

Q. What is your favorite book of the last year?

A:  The Big Short.  I was already skeptical of the ethics of some bankers and asset managers.  Now…I’m scared to death.

Q.   Name a venture-backed company you are are not invested in but wish you were.

A.  Solar City.

Q.  Name a practicing VC from another firm who you admire and why?

A.  There are a number of them, but they all share the same character traits – intelligent, successful, yet humble and enjoyable to hang out with.

 

04

May

2011

NVCA Webinar on Secondary Markets for PortCos Now Available PDF Print E-mail

Mark Heesen

Written by Mark Heesen   
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As promised at the NVCA meeting in April, last Friday we held a webinar for venture capital firms and their portfolio companies on issues related to secondary market sales.  Led by Frank Currie a partner at Davis Polk & Wardell, the webinar featured guidance and commentary from Josh Green, general partner of Mohr Davidow Ventures and Delida Costin, general counsel of Pandora Media.

The webinar focused on issues for portfolio companies considering secondary sales of their privately held stock as well as guidance for how to mitigate corresponding regulatory and market risks and liabilities.  Many companies are facing pressure from their long time employees to offer various degrees of liquidity.  However, with that strategy comes a host of issues that must be adequately addressed so as not to run afoul of regulations or create a situation in which the company loses its flexibility to make strategic decisions. Frank, Josh and Delida each shared ways in which companies can pursue secondary market transactions most effectively.

Due to the significant interest in this topic, the NVCA is making the archive of this webinar available to the public free of charge.  You can download the full presentation here.  We remain committed to educating our members and their companies about this rapidly evolving area.

 

04

May

2011

Venture Impact 6.0: VC-Backed Companies Continue to Matter PDF Print E-mail

John Taylor

Written by John Taylor   
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For the last decade, IHS Global Insight has regularly measured the impact of venture-backed companies on the U.S. economy. The latest data is now available and demonstrates that even during difficult economic times, these companies outperform their peers.

Using end of year 2010 data, IHS Global Insight used commercial corporate databases to determine headcount and revenues for companies that were once venture-backed. For those venture-backed companies that were acquired, the employee count was either pro-rated or removed from the data base depending on the size of the acquired company, making the final headcount estimate a conservative one. By the end of 2010, the direct counts from these databases showed venture-backed companies employed 12 million people and had revenues of $3.1 trillion. During one of the most difficult recessions in modern history, venture-backed company revenues grew and, while employee headcount declined, it was less so than the U.S private sector and now comprises a higher percentage of jobs in our country.

Consider the following:

In 2010... 

  • Venture-backed companies employed 11 percent of private sector workforce
  • Venture-backed company revenues corresponded to 21 percent of U.S. GDP
  • Venture capital investment is typically 0.1 - 0.2 percent of GDP in a given year

 From 2008 - 2010...

  • Total US private sector employment fell 3.1 percent while venture-backed employment fell 2.0 percent.
  • Total US company sales fell 1.4 percent while venture-backed company sales increased 1.5 percent.

While many of the companies left the venture capital "nest" after going public or being acquired, often years ago, something in the early years of these companies set them on a positive trajectory that serves the U.S. economy well today. Just as universities track the success of their alumni after graduation, in some cases decades after leaving the institution, so too does the venture capital industry. We can say unequivocally, that these companies continue to create tremendous and increasing value for our country.

Previous editions of this study were done for 2000, 2003, 2005, 2006, 2008 year end metrics and can be found on the NVCA website. A full report will be available by the end of this quarter.

Last Updated on Wednesday, 04 May 2011 09:36
 
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