Braemar Nears Close of $100M

Braemar Energy Ventures, a venture firm focused on energy technology, expects to close its premier fund between $70 million and $100 million, PE Week has learned. The New York-based firm expects to have a final close on the fund within the first half of 2004.

Braemar held a first close on $35 million in December 2002.

Mass Mutual Financial Group is the firm’s leading limited partner. Other LPs include Durst Organization, a real estate development firm, and the Gas Technology Institute, a research group serving the natural gas industry.

Braemar was founded last year and has three investment professionals: Managing Director George Reichenbach, a former Advent International partner; Managing Director Neil Suslak, a former executive with S.G. Warburg & Co. and Swiss Bank Corp.; and Managing Director William Lese, a former partner with venture capital firm Mantis Holdings.

Braemar has made two investments so far. The firm invested in the $2.6 million Series A round of Boston-based Enernoc, which provides software and managed services to distributed generation energy companies. Draper Fisher Jurvetson (DFJ) and Draper Fisher Jurvetson New England participated in the round, which closed in June.

Braemar also invested in the $15 million Series B round of Solicore, which develops and provides high-energy rechargeable batteries for industrial and consumer markets. Air Products and Chemicals, DFJ, Firelake Strategic Technology Fund, Hydro-Quebec CapiTech and OPG Ventures also invested.

Braemar’s investment strategy focuses on advanced power conversion and storage, clean fuel processes and storage, energy supply IT and communications, power supplies and pollution control. Braemar’s range of sector interests includes companies that provide energy management software and services for power grid management, high-energy fuel cells, carbon nanotubes, and emergency generator services.

No longer is clean energy the domain of energy venture powerhouses, such as Nth Power, the Altira Group, Chrysalix Energy, and Advent. Over the past year or so, a host of brand name VCs have jumped into the space, including Benchmark Capital, DFJ, Enterprise Partners, Intel Capital, Mayfield and U.S. Venture Partners.

Other firms with strong interest in investing in energy companies include Apax Partners, Kleiner Perkins Caufield & Byers and New Enterprise Associates.

Investments in clean energy technology have made it the sixth largest venture capital category, as venture firms pumped $488 million into U.S.-based clean energy deals last year, according to Cleantech Venture Network, a New York City-based research and information firm specializing in clean energy.

Although the dollar amount declined from the prior year, energy investments as a percentage of overall venture activity grew to their largest point in five years (See charts below).

It’s no surprise why. This summer’s blackouts in the Northeast dominated the news. Plus, worldwide power consumption is on the increase and the United State’s reliance on oil and its ties to Middle East politics are constantly called into question.

As a result, the market opportunity is huge. The worldwide clean energy market is forecast to grow to $89 billion by 2012, a nine-fold increase from $9.5 billion in 2002, according to Clean Edge Inc., an energy research and consulting firm based in Oakland, Calif.

In particular, wind power is expected to expand from a $5.5 billion business last year to about $49 billion in 2012. During that same 10-year period, the solar power business will flare up from $3.5 billion to more than $27.5 billion, while the fuel cell business will surge from $500 million to $12.5 billion, Clean Edge predicts.