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Friday, Mar 29, 2024

Clean-Tech Investment is Trickling Into the Region

Venture capital investors sank a record $3.3 billion dollars into clean-tech companies during the first three quarters of 2008, according to a report by Ernst & Young. That’s a 71 percent increase over the same period of the previous year. The report defines clean-tech as ” the umbrella term for the range of technologies, goods and services that minimize or eliminate the environmental impact of economic activity and form the basis of the corporate response to climate change.” In other words, those who are making the world cleaner and greener are receiving rather large sums of financing and some of that money is making its way into the San Fernando Valley. Benjamin Kuo, founder and operator of Socaltech.com which tracks the ins and outs of the technology world in the region, ran down a list of the technologies that are being developed or produced locally. “There’s Transonic Combustion in Camarillo, they’re doing technology for gasoline energy efficiency,” said Kuo. “They’re backed by Khosla Ventures ” That’s the venture capital firm backed by Vinod Khosla who is considered the number one clean-tech investor in Silicon Valley. Other investors in the company, according to Kuo, include Venlock Associates, the company that funded Intel and Apple, and also Rustic Canyon Partners in Santa Monica. Another company on his radar is Z-Power in Camarillo. That company is designing a safer, more efficient battery for laptops. A look at Kuo’s database of technology funding activities in the fourth quarter of 2009 turned up Advanced Modern Technologies Corporation in Woodland Hills. The company invents and manufactures water-saving bathroom automation systems. Lee Maercovich, vice president of AMTC says his father, Jorge “is a huge inventor.” “We own patents on our systems, on our designs,” said Lee Maercovich, “and we sell through plumbing distributors and an online store. All of our products are for commercial restrooms.” Their most recent invention is a dual-flush system for toilets, allowing a user to select whether they need a full flush or a less powerful flush. Selecting the latter reduces water usage by 30 percent, said Lee Maercovich. The company has been in business six years and last year, when Jorge Maercovich developed with this latest product, they decided they needed some more capital. Their annual revenues are about $1 million. They hooked up with a private equity firm who, in return for 30 percent of the company, gave them “a couple million dollars,” said Lee Maercovich. “One of the investors is actually an ex-CEO of one of our competitors so he brings a lot of experience and a lot of connections to our company,” said Lee Maercovich, “We still have control of the company. It’s more about making the products and we’re all on the same page with that.” Then there’s International Solar Electric Technology, Inc. in Chatsworth which has received two rounds of private equity investment so far. Vijay Kapur started the company in 1985, after leaving his position as director of research for ARCO Solar. For many years, ISET was strictly research focused, with government contracts from agencies like the Department of Energy, the Department of Defense and NASA helping fund research into very low-cost solar cell manufacturing technology. In 2006, the company was ready to move into production. “Because of the solar industry getting a lot of attention, we found private equity investors, not venture capitalists,” said Kapur. “I do not necessarily subscribe to the venture capital model. Even though we were being chased by a lot of VCs, we did not accept their offerings because they were pretty exploitive as far as I was concerned.” The funding helped ISET lease a building which, Kapur said, “happened to be right next door to where old ARCO Solar used to be.” Since 2007 they have been creating a state-of-the-art thin-cell solar cell manufacturing plant. “We will be coming up with a prototype product early this year and plan to go into full-scale production after that,” said Kapur. And even though he says he is being chased by economic development offices in states like Michigan, Oregon, Iowa and Arizona, he has decided to keep the manufacturing process in Chatsworth. “I’ve lived in the Valley since 1979, 30 years this year, and I’ve got my roots here,” said Kapur. “I’m going to create jobs, unlike other companies that run to China for low-cost labor. I want to create jobs here, top-notch high-paying salary jobs.” It’s only the beginning, said Nevena Orbach, president of the Los Angeles Venture Association and CEO of The Orbach Company in Woodland Hills. Their December breakfast meeting, titled “Funding Clean Tech Ventures, was fully subscribed. “We had about 170 people attending at 7 a.m.,” said Orbach. During the event, which took place at the Skirball Center, LAVA asked for a show of hands to gauge the audience. Orbach said that 80 percent of the audience was involved in clean-tech in one way or another. “Forty percent were CEOs looking for funding,” said Orbach. “Another 40 percent were private equity/transactional people who are servicing these types of companies.” The remaining 20 percent are LAVA members who regularly attend the monthly meetings to network. She sees a bright future for this market sector. “There are still companies doing deals,” she said. “The difference today is that the companies getting funded have strong business plans and have a real product. It’s not just an idea on a napkin and that is the major different between today and 2000.” ISET founder Dr. Kapur agrees. “This industry since 1997 has been growing at an annual growth rate of 35 percent,” he said. “There are all kinds of projections from all kinds of analysts but generally predictions are that this will be one of the biggest businesses in the next 20 years.”

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