amadeus capital partners, ltd - iea · pdf file29 oct 2007 pat burtis –amadeus capital...
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Slide 1
European Cleantech and Bioenergy29 Oct 2007 Pat Burtis – Amadeus Capital Partners Ltd
Slide 2
Amadeus Capital Partners, Ltd
• A leading UK technology venture capital firm– Offices in London and Cambridge, UK
• Founded 1997 by Hermann Hauser and Anne Glover• Focal sectors
– Telecoms, IT, Semiconductors, Med Tech, Cleantech• Stage agnostic – comfortable with early-stage technology
risk• Three main funds and two seed funds• ~£460m ($900m+) under management
– Current fund is £162m• Have invested in ~60 companies over 10 years• Invest in UK, Europe, and Israel• Interesting ‘cleantech’ deals:
– Plastic Logic, Power Paper, Power ID, Liquavista
Slide 3
Agenda
• Cleantech Investment Rationale• Cleantech Investment Trends• Interesting Bioenergy Sectors
– Biofuels– Gasification
• Concluding Thoughts
Slide 4
Major Cleantech Categories (Amadeus take)
EnergyPollution & Waste
Industrial Consumer
• In situ pollution (Air, Soil, Water)
• Carbon• Industrial
Effluence• Isolated waste (eg
MSW, tyres)
• Manufacturing, Industrial
• Bio/Chemical• Transport &
Logistics• Agriculture &
Forestry
• Consumer goods and services
• Electricity Generation
• Storage• Efficiency and
management• Fuels• Biomass/CHP/
Gasification
• IT• Advanced Materials
& Chemistry
• Life Sciences/Biology• Semiconductors• Process Technologies
Key Enabling/Crossover Technologies
Water
• Treatment & Purification
• Distribution & Reclamation
• Desalination
Slide 5
Why Cleantech/Clean Energy?• Compelling long-term macro drivers
- Rising global demand (and prices) for energy; increasing de/re-regulation; energy security
- Commodity, materials, and resource supply constraints
- Urbanization
- Increasing environmental pressures eg climate change (and increased willingness to pay by society)
- Technology innovation and cross-over
• Demonstrated success
- Large and growing markets (eg solar, biofuels)
- Some major exits
• Strong overlap with Amadeus strengths, portfolio, and relationships
- Cross-over with existing domain expertise (semis, IT, optics, physics, manufacturing and ops)
- Power Paper, Plastic Logic, Liquavista, Nujira, Acol
- Significant research/tech. ties (eg Cambridge, Imperial, portfolio companies)
Slide 6
Why Europe/UK?• Dealflow
– Strong European technical platform for spinouts• Academic (Cambridge, Oxford, Imperial, etc)
• Corporate (Siemens, Phillips, Volvo, etc)
• Govt and Quasi-Govt (Fraunhofer, VTT, Carbon Trust, etc)
– Lots of ‘stealth’ or undiscovered cleantech companies with significant progress (eg pre-date ‘cleantech’ boom)
• Favorouble regulatory environment– Kyoto/ETS, EU Waste Directive, Solar Subsidies, Euro X auto regs, etc
• Favourable consumer environment (versus US)
• Less competition, more cooperation among investors– Valuations still sane (Consider early stage US solar deals @$300m+)
– Enthusiasm for syndication and cooperation amongst VCs (so far)
• Some strong exits
Slide 7
Europe/UK Cleantech Challenges
• Lack of strong managers– Fewer serial entrepreneurs than US
– Cleantech sector very new here
– Different entrepreneurial ambitions
• Fragmented markets and inherent trade barriers– Different regulatory regimes and markets
– Language and cultural differences
– Legal complexity
• Nascent venture capital infrastructure– Smaller funds, smaller rounds
– Few pan-European funds
Slide 8
Agenda
• Cleantech Investment Rationale• Cleantech VC Investment Trends• Interesting Bioenergy Sectors
– Biofuels– Gasification
• Concluding Thoughts
Slide 9
North American Cleantech VC Investment
Source: Cleantech Venture Network
Amount invested and Number of US and Canadian Cleantech Venture deals by Year, 2001- 2007H1
124
249
246
205191
222
108
0
50
100
150
200
250
300
$US
m
0
500
1000
1500
2000
2500
3000
3500
Num
ber
of d
eals
Average Investment: $7.2M $5.7M $5.3M $5.4M $6.5M $9.6M $12.7m
2001 2002 2003 2004 2005 2006 2007 H1
Slide 10
North America vs. Europe Cleantech VC investing
European Cleantech VC investments appear to be 15%-25% of the North American total, depending on the quarter
$0
$200
$400
$600
$800
$1,000
Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07
$125M*
$268M
$843M
$514M
* CVN just began tracking European investments in Q1 2006, so this data set is likely incomplete** 8 of 20 European deals in Q1 07 were of undisclosed value
Source: Cleantech Venture Network
Millions of US Dollars
$934M
$147M
$613M
$168M
(17)
(74)
(47)(Top
5 deals= $572m)
(61)
(17)(23)(30)
(67)
$731M
(64)
$843M
(60)
$67M**(20)
$154M
(17)
Slide 11
UK vs. Europe Cleantech VC investing
The UK leads the European Cleantech VC scene in both number of deals and dollar volume
0
5
10
15
20
25
Q4 06 Q1 07 Q2 07 Q3 07
* 12 of 20 European deals in Q1 07 were of undisclosed value** Data may be incomplete owing (data still pending from Q3)
Source: Cleantech Venture Network
DealsPerQuarter
$0
$50
$100
$150
$200
Q4 06 Q1 07 Q2 07 Q3 07
UK
GER
ISR
NORSWEOther
UK
GER
ISR
SWE
NOR
UK
GER
ISRSWE
Other
FR
OtherFR
UK
GERISR
NOR
UKUK
UK UK
ROEROEROE
ROE
1920
17
10
$164m
$67m
$154m
$188m
** ***
Slide 12
Top European Cleantech VC Deals Q1–Q3 07
Source: Cleantech Venture Network
Company Sector Business Description
Amount Invested
Investors Quarter
Think Global AS
Transport Electric Car $60.0m British Hazel Capital LLP, Canica, Capricorn Investment Group, CG Holding, DFJ Element, RockPort Capital Partners, Wintergreen Advisors
Q3 07
TMO Renewables
Biofuels Cellulosic ethanol (enzymatic hydrolysis)
$29.9m Aegon Asset Management, Charles Stanley Securities, City Capital
Q2 07
Solarcentury Energy Generation
Building-Integrated PV products and installation
$27.3m Zouk Ventures, Good Energies Inc., Foursome Investments Ltd, Scottish and Southern Energy Plc., VantagePoint Venture Partners, Vantania Holdings ,
Q3 07
Metalysis Industrial New metals winning process (FC Cambridge)
$26.5m 3i, Cambridge Capital Group, Chord Capital, Environmental Technologies Fund, QuinetiQ, Seven Spires Investments
Q3 07
SWAY AS Energy Generation
Floating Wind Turbines
$25.8m Lyse, Rosenberg Verft, Scatec AS, Statoil
Q3 07
Slide 13
Traditional Technology Funding Cycle
Source: Murphy, L.M. et al, NREL (2002)
Slide 14
Technology Commercialization Funnel (Schematic)
Source: Murphy, L.M. et al, NREL (2002)
Research (government, university, corporate, other)(X000s)
Independently Commercialized(Founders, angels, seed, grant)
(500-1000?)
VC candidates(100)
VC invested(3)
Successful exit (1)
(1 in 100 for any 1 VC)
Slide 15
What makes a technology investable?
• First, need a company!• Differentiated approach with significant competitive
advantages over other technologies (new and established)– Parity with fossil fuels is (usually) not enough
• Large, growing marketplace (realized or emerging)– >$1B/year revenues
• Clear customer(s) with burning, unmet need and willingness/ability to pay
• Defensible IP position• Profitable business model
– Control the flow of value• Entrepreneurs with vision and ambition, and who know
how to work as part of a team
Slide 16
Agenda
• Cleantech Investment Rationale• Cleantech Investment Trends• Interesting Bioenergy Sectors
– Biofuels– Gasification
• Concluding Thoughts
Slide 17
Major Cleantech Categories (Amadeus take)
EnergyPollution & Waste
Industrial Consumer
• In situ pollution (Air, Soil, Water)
• Industrial Effluence
• Isolated waste (eg MSW, tyres)
• Carbon
• Manufacturing, Industrial
• Bio/Chemical• Transport &
Logistics• Agriculture &
Forestry
• Consumer goods and services
• Electricity Generation- Solar
• Storage• Efficiency and
management• Fuels• Biomass/CHP/
Syngas
• IT• Advanced Materials
& Chemistry
• Life Sciences/Biology• Semis• Process Technologies
Key Enabling/Crossover Technologies
Water
• Treatment & Purification
• Distribution & Reclamation
• Desalination
Slide 18
Global Biofuels Growth Forecast
Source: DuPont, JP Morgan. Jefferies;
0102030405060708090
100
2005 2020
CAGR 2005-2020
N.A.
SA/CA
APAC
EMEA
15%
23%
23%
5%
10-12B gals
87B gals 16%
Billions of Gallons/yr
Market sizeAt $2/gal:
~$20B ~$175B
Slide 19
Ethanol Dominates Global Biofuels Production
Source: F.O. Lichts
Millions of liters
Slide 20
Global Ethanol Production
Source: F.O. Lichts
Slide 21
High-level Cost Comparison and Energy Balances
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
ProductionCost perGasolineEEG
Petrol(@$60/b)
Soy BD
WasteGrease
BD
CaneEthanol
CornEthanol
CellulosicEthanol(2012)
$1.40-$1.60
~$2.00
~$1.30 $1.00-$1.10
$1.50-$1.70 $1.20-
$1.40
Net Energy Balance:
~5X 1.9X-3.2X
>2X ~10X ~1.3X 4-5X
Slide 22
Global Biofuels Enzyme Market Potential 2012(Amadeus Estimate)
Source: Amadeus analysis; EIA AEO 2006; BP; JP Morgan, Jefferies; NRELNote: incldues ADM captive market
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
MillionsUSD/yr
2005 2012
~$210m
~$1.2B
Cooked($730m)
Cold ($160m)
Cellulosic($340m)
Cooked($180m)
Cold
Key Assumptions:• Addressable market = N.A., EUR, 50% of ROW. Excludes biodiesel and cane
• CAGRs 2005-2012: NA 20%, EUR 50%, ROW 50%• Share by method in 2012: Cooked 80%; Cold 10%; Cellulosic 10%
• Enzyme price/gal = Cooked $.04, Cold $.07, Cellulosic $.15
Total Global Ethanol Production: 10B gals 32B gals
Rough 2012 MarketBreakdown:
NA 67%EUR 19%ROW 14%
Slide 23
Biofuels Investment Opportunities
• Efficient utilization of waste/cellulosic feedstock (<$2.00/gallon)
• Remove/simplify process steps for biofuels conversion
• Feedstock optimization
• New fuels
• Other supply chain innovation
• Novel enzymes and thermophiles for conversion of feedstock and fermentation of complex and simple sugars
• Gasification?
• Combine cellulosic pre-treatment, hydrolysis, and fermentation into two steps (or even one); new reactor designs
• Dramatically reduce energy penalty; speed up process; improve yields
Principle Opportunity
• Non-plant feedstocks (eg algae)• Novel pathways from waste materials or
other chemicals
• Butanol; DME; other?
• Biofuels branding, distribution, marketing• Vehicle retrofits
Slide 24
‘Green Chemistry’
Old Processes New Processes
Petroleum feedstocks
Thermo-chemical catalysis
Toxic end-product
and by-products
• Depletive• Extractive
• Multi-step• Compounding
yield loss• High energy
penalty
• Transport• Disposal• Recovery• Emissions
Biomassfeedstocks
Biologicalconversion
Degradable/designer
end products
• Renewable• Un-used waste
• Parallel• Naturally high
yields• Lower energy
penalty
• Optimize product mix
• Optimize eg combustion characteristics
Slide 25
Major Cleantech Categories (Amadeus take)
EnergyPollution & Waste
Industrial Consumer
• In situ pollution (Air, Soil, Water)
• Industrial Effluence
• Isolated waste (eg MSW, tyres)
• Carbon
• Manufacturing, Industrial
• Bio/Chemical• Transport &
Logistics• Agriculture &
Forestry
• Consumer goods and services
• Electricity Generation- Solar
• Storage• Efficiency and
management• Fuels• Biomass/CHP/
Gasification
• IT• Advanced Materials
& Chemistry
• Life Sciences/Biology• Semiconductors• Process Control and Simulation
Key Enabling/Crossover Technologies
Water
• Treatment & Purification
• Distribution & Reclamation
• Desalination
Slide 26
Compelling market driversEU Directive creates urgent need to
reduce waste going to landfill
UK household waste to 2019
05
101520253035404550
2005 2007 2009 2011 2013 2015 2017 2019
Mill
ion
tonn
es
MSWBMWLATS
LATS targets are designed to enforce a 65% reduction in biodegradable municipal waste (BMW) going to landfill by 2020
0
1
2
3
4
£ bi
llion
s
2005
2007
2009
2011
2013
2015
2017
2019
Annual cost of LATS Penalty
Defra (UK) estimates that 1,000 new waste treatment facilities will be needed in the UK just to comply with the EU landfill directive at a cost of £20 bn
Slide 27
Flexibility of Gasification
Gasification - The
Production of Synthesis Gas
Di-Methyl Ether(DME)
Diesel Fuel
FT Reaction
Conversion to Ethanol
Use in Diesel FuelProduction
Production of Methanol
Direct to Ethanol
Next Generation of Compression engine fuel
PowerGeneration
HazardousMaterialDisposal
Use in Ammonia Fertilizer
Production
Slide 28
Huge Market OpportunityRenewable Power Generation: UK/EU• Waste gasification can provide 11GW of the 35GW of new capacity required
by the UK over the next 10 years:– £12 billion annual revenues from tip fees and power sales– Would be 400 x 10 MW facilities (addressable market of £5 billion)
• Similar opportunities throughout Europe and US providing localized power islands in manufacturing and public sectors
Biofuels: US, EU, Asia• US and EU governments are raising mandated targets to 50 billion gallons
(5x increase) in next 12 years:– £75 billion revenue market– £50 billion investment
• Asia/Japan desperately short of transport fuels creating huge growth markets for ethanol, biodiesel and LPG
Biomass/waste co-firing: US, Asia• Syngas from biomass and waste can be co-fired in coal fired power plants
to reduce emissions and increase capacity• Significant opportunity in US and Asia with both new and legacy plants
Slide 29
Agenda
• Cleantech Investment Rationale• Cleantech Investment Trends• Interesting Bioenergy Sectors
– Biofuels– Gasification
• Concluding Thoughts
Slide 30
High Level Thoughts• Multi-decade trend to rebuild OECD capital infrastructure and
construct huge new infrastructure in developing economies– De-carbonize– Raise efficiency / reduce waste– Trillions of dollars of capital investment over next 2-3 decades
• Urgency derives from multiple sources– Resource shortages and discontinuities (water, energy, raw materials)– Security (Geopolitical and economic)– Environmental pressures
• Technology convergence enabling entirely new approaches– Examples: IT + power industry; Directed evolution + fuels; and so on– Reveals lots of new low-hanging fruit
Fertile investment ground for decades to come!
Authorised & Regulated by the Financial Services Authority Slide 31
Thank You!
Patrick BurtisKauffman Fellow
Amadeus Capital Partners &Imperial College Department of Earth Sciences and Engineering
[email protected]@imperial.ac.uk
Slide 32
Backup
Slide 33
Holy grails
• Solar at $1.00/W installed (or $.10/kWh)
• Cellulosic biofuel at $1.50/eeg (cost)
• Carbon capture & sequestration @ $30/t
• Direct coal/carbon fuel cell at $.10/kWh with CO2capture
• Residential/SMB energy management device & service with 1 year payback
The Goal Current State of Art• $6/W installed
• Cane ethanol @ $1.10eeg; Corn ethanol @ $1.50eeg
• Sequestration unproven
• Lab scale at very low efficiencies
• N/A (Commercial ESCO)
Slide 34
Why cleantech is different
• Looks like biotech– Capital intensive– Long commercialization times– High technology risk– heavy regulation
• Looks nothing like biotech (or IT)– Commodity end-markets
• If you can make it, you can usually sell it (quickly)• Market price = no rent! = lower GMs• Long-term winners determined by cost cost cost• Global in outlook
– Manufacturing businesses = scalability tied to CAPEX– Capital intensity is more in D than R (vs biotech)– Real estate, project development, supply chain are critical– Incumbent infrastructure good for 3-5 decades– No Moore’s Law = few 10X better/faster/cheaper (more incremental)– Regulation is much more fragmented
Slide 35
Top UK Cleantech VC Deals Q4 06 – Q1 07
Source: Cleantech Venture Network
Company Sector Business Description
Amount Invested
Investors Quarter
TMO Renewables
Biofuels Cellulosic ethanol (enzymatic hydrolysis)
$29.9m Aegon Asset Management, Charles Stanley Securities, City Capital
Q2 07
Solarcentury Energy Generation
Building Integrated PV products and installation
$27.3m Zouk Ventures, Good Energies Inc., Foursome Investments Ltd, Scottish and Southern Energy Plc., VantagePoint Venture Partners, Vantania Holdings ,
Q3 07
Metalysis Industrial New metals winning process (FC Cambridge)
$26.5m 3i, Cambridge Capital Group, Chord Capital, Environmental Technologies Fund, QuinetiQ, Seven Spires Investments
Q3 07
Intelligent Energy
Energy Generation
PEM Fuel Cells $17.1m Black River (2 funds), Credit Suisse, Evolution Placements Corporation, Meditor Capital Management
Q2 07
Sterecycle Recycling Autoclave systems for MSW
$15.0m Ailsa3 Ventures Q4 06
Slide 36
KFP/KTP Structure
Amadeus
Kauffman Fellows Program
(Center for VentureEducation)
(Imperial College London)
KauffmanFellow
Slide 37
Additional Considerations• Capital efficiency• Time to market• Exit prospects• New interface vs. ‘plug and play’• Industry competitive landscape• Surrounding industry ecosystem• Market conditions• Policy/regulatory environment• Location• Other investors• Other factors
– Eg is it ‘Clean’?