While CMEA’s investment mantra is to be stage agnostic, partners believe there’s increasing demand for capital from companies in the cleantech space seeking to build manufacturing facilities or infrastructure, says CMEA Managing Director Jim Watson.
There are a few funds already serving this niche. Most notable is the $500 million Green Growth Fund launched by
But Watson says that demand still exceeds supply.
“Our take is that [the Green Growth Fund] is a drop in the bucket,” says Watson, who adds that his firm is contemplating a growth stage fund in the $500 million range.
Kelly DePonte, a partner with San Francisco-based placement agency
One of the upsides to such growth investments is that “the investment payoff is in months as opposed to years,” he notes.
CMEA isn’t a newcomer to growth stage investing or the cleantech sector. In March, the firm raised $400 million for its most recent fund, CMEA Ventures VII. CMEA intends to invest about half of that capital in energy and cleantech investments.
Since fund VII’s close, CMEA has invested in several cleantech companies. CMEA participated in the $2.6 million first round of funding of NuScale Power, a developer of small-scale nuclear reactors.
And last year, CMEA was one of 12 investors in a $30 million late stage financing of A123 Systems, a developer of lithium ion batteries. Earlier this month, A123 filed a registration statement for a proposed $175 million IPO. The Watertown, Mass.-based company has raised more than $230 million in funding from CMEA and other investors since it was founded in 2001, though its largest shareholders are
CMEA has also invested in five rounds raised by Redwood City, Calif.-based Codexis, a developer of biocatalyst and fermentation processes and products to the life science, chemical and biofuel industries. Codexis, which in April filed for a $100 million IPO, is a spin-out of CMEA portfolio company Maxygen.
Additionally, CMEA invested in Solyndra, a stealth startup developing thin film solar technology.
Other recent investments outside the energy sector include Nteryx, a developer of therapeutics acting in the gastrointestinal tract, and Luminus Devices, a developer of solid state lighting technology for TVs and other display products.
Meanwhile, CMEA has bulked up its partner base along with its portfolio. Two years ago, the firm had 10 investors, and now employs 21, says Watson, who joined seven years ago. Going forward, he says the firm is looking to expand its investment scope, including a broader focus on growth stage.
“As we look at building a firm for the next 20 or 30 years, it’s pretty clear you can’t be just a venture capital fund,” he says. “You need to look at what other risk capital you can manage.”