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Distributed Generation: A "Hot Corner" for Venture Capital?
for example - distributed power rates would look more attractive. "If the true price signal was being sent by PEPCO, then photovoltaics would get very interesting for people in the 703 and 301 area code," he says.
What could be one of Shaw's most potent investments is Evergreen Solar Inc. of Waltham, Mass. The company makes photovoltaic modules, the heart of solar electric systems. The company's String Ribbon manufacturing process produces twice as many solar cells per pound of silicon as conventional manufacturing methods, says Richard G. Chleboski, one of the company's three co-founders. It's a technology that promises a 25-percent cost advantage over leading crystalline silicon competitors.
The company was started in the fall of 1994 with $500,000 in funding from Shaw. It also received $500,000 from Zero Stage Capital, a small business investment company. Other investors followed, including Calvert Social Investments and Rockefeller and Co. So far the company has raised more than $13 million in venture capital dollars in three rounds of financing. Other investors include Solstice Capital and Venture Investment Management Co.
Evergreen is now in "pilot scale" manufacturing. This follows its April 1997 shipment of a set of solar panels to a rural Bolivian village. The panels provide power for the first time to 130 families, enough for each home to operate two light bulbs and a radio. The company will bring in $500,000 in product revenue this year. It employs 40.
Luring Investors Into the Fray
Chleboski says that convincing investors to believe in PV technology can prove challenging. But if costs can be reduced, the size of the market is in the billions of dollars a year - and that is enticing for investors.
"Getting the first investor is key," he says. "PV as a whole doesn't have a great reputation. It's known as the place where oil companies lose a lot of money and then eventually get out of the business."
Fortunately for Evergreen, it won a first investor's attention. "After getting Bob Shaw, it sort of opened up doors to have us be able to present to other venture capital companies," Chleboski says. "You never know you're going to get the money until you actually have it. Each round, getting the first guy to say 'yes' is always challenging."
Chleboski advises startups to "make sure you have a reasonable market project, market plan, and if there is a way to establish a market outside the utility business, then I would recommend doing it.
"The basic sort of rub on utilities is they're conservative. They're slow to change, as a whole - that's not true of all utilities ¼ if you can come in with a new technology in a different area, then you have a chance of being successful with the venture community."
Proton Energy Systems may fit the description of technology applied to a new area. The company hopes to offer industrial gas companies and utilities a water electrolyzer, the HOGENTM. The product uses electricity to separate water into hydrogen and oxygen gas. Walter "Chip" Shroeder, CEO, calls it "hydrogen by wire."