Clean Tech: New Cycle Capital, Profits and Social Benefits

Readers of this blog know I am interested in innovative approaches to making social change while making money.

One of my best readers pointed me to a Venture Beat story about a new venture capital firm designed to maximize profits and social benefits. The guys behind New Cycle Capital want to prove that companies that are doing good can make money too. Very cool.

Two Silicon Valley venture capitalists are creating a new venture capital fund that aims to produce competitive profits and also “social benefits.” The fund, to be kicked off next year with at least $50 million, will focus on the “green economy,” as well as financial and other services that help low-income groups.

Called New Cycle Capital, the firm is led by Josh Becker (pictured left) and Benjamin Black (pictured right), both investors who have worked for mainstream venture capital firms. Becker spent time at Redpoint Ventures, while Black worked at Maveron and Rosewood Capital, and was VP of corporate development at Harris Interactive.

Becker has long been socially active in the community, serving on the board of the Full Circle Fund, a San Francisco group of executives that fosters relationships between businesses and non-profits.

Early this year, the two began to raise the fund, after they realized it’s wrong to assume that investments in companies that provide tangible social benefit don’t make as much money as other investments, Becker said. They want to focus on early-stage companies, producing stellar returns in areas such as the ecosystem of services around clean-technology.

New Cycle Capital, LLC specializes in early stage investments. The firm seeks businesses that protect the environment, reduce economic bifurcation, and transform exploitative industries.

Read the full story: Venture Beat

Philanthropy & Environmental Change: Why Gore Chose I-banking over Non-Profit

"It certainly was not for the money," writes Susan Raymond of the philanthropic consulting firm Changing Our World (see onPhilanthropy), since 100% of former Vice President Al Gore's salary will be donated to the Alliance for Climate Protection.

"Rather, Mr. Gore's new affiliation with Kleiner Perkins Caufield & Byers, announced on November 12, reflects the evolution, and even maturation, of the environment as a matter of for-profit markets rather than as a matter of nonprofit endeavor."

Readers of this blog know I have been skeptical about the ability of the philanthropic capital market to address the growing and pervasive environmental problems we face. Ms. Raymond, whose opinions I have quoted before, adds some numbers to the argument:

1.) On the nonprofit side and in the U.S., an estimated $6 billion flows to environmental causes. This represents more than a tripling of funding in the last 20 years. Still, that $6 billion represents just 2% of all philanthropic giving. An examination of the grant making of private foundations finds a similar pattern.

2.) In 1998, foundations made nearly 5000 grants to the environment totaling $455 million. By 2005, that had increased to 6500 grants for over $800 million. Yet, environment as a percentage of all grants remained at 5%, and the portion of total grant value only increased to 5% from 4.7%.

Now to the other side,

1.) The total value of the global environmental technologies market is $600 billion, 100 times the size of environmental philanthropy.

2.) Environmental technology and services companies represent over 1.4 million jobs in the U.S. in 115,000 private companies. And those markets are growing as the drive for environmental protection spurs innovation and new technologies.

But "technology is increasingly the least of the market," writes Raymond. "Pollution, water rights, and even biodiversity are themselves becoming financial markets....the market for SO2 allowances is valued at $4 billion, with swaps, puts and calls, and emissions allowances are used as collateral, being loaned or swapped for other pollutants. And pollution? In the U.S. SO2 emissions are on track to fall to half their 1980 levels by 2010."

Raymond goes on to note that "some financial observers expect the environmental commodities market to have a valuation of $1 trillion by the end of 2012."

Payments for ecosystem benefits is also making progress, albeit slowly. Raymond cites a Costa Rican example, wherein "forest owners are paid for the environmental services provided by their bio-assets, carbon, biodiversity, watershed management, and natural beauty. In the decade 1996 to 2005, the program preserved the forests and increased household income by 15%."

And, as I've reported previously, some big name players, such as David Brand, founder of New Forests Pty Limited, and Priceline.com co-founder Jessie Fink, are getting into the game.

This is not to say that the non-profit approach to environmental change is dead in the water. But I think it's important to take notice of the emerging market being created from the intersection of financial innovation and environmental private action.

If it all leads to an accelerated response to global environmental issues -- water, climate change, or biodiversity loss -- then perhaps the market herd will move to greener pastures.

Clean Tech: More News on First Solar

First Solar is one of my favorite alternative energy stocks. I've been tracking it for a while now, for 100 points or so, (52-week low = 26.40; high = 252.390). And I liked what I heard on last month's conference call.

Earlier this week, Lazard raised its price target to $250 from $225, citing "its overall strategy to garner leading and defendable market share in the mainstream electric power generating market, without subsidy, while maintaining a superior return on capital through people, processes, technological leadership, scale, strong financial discipline, and risk control"...and that First Solar "reiterated its cost-reduction goal of achieving module ASP of $1-$1.25/watt by 2010-2012."

Analyst Sanjay Shrestha of Lazard Capital Markets said, "We believe this strategy will allow First Solar to successfully migrate from subsidized markets, to renewable energy markets, to mainstream electric power markets over the next several years."

And today, First Solar (Nasdaq:FSLR) announced that its Chief Financial Officer, Jens Meyerhoff, will present to the investment community on Thursday, December 6, 2007 at 3:00 PM PT (6:00 PM ET), at the Lehman Brothers Global Technology Conference in San Francisco, CA.

Live and replay audio web casts of the Company's presentation will be available on the "Investors" section of the Company's website at investor.

First Solar, Inc. manufactures solar modules with an advanced thin film semiconductor process. For more information, see First Solar.

Global Climate Change: Expecting a Miracle in Bali? Don't Hold Your Breath

The Bali Climate talks begin today. The goal is to develop an agreement that can replace Kyoto.

Perhaps it's the skeptic in me, but I don't hold out much hope for this week's sessions. Especially with continued posturing by the US and China.

Maybe they'll prove me wrong. I doubt it.

I continue to feel we need stronger economic incentives before we will seriously address climate change.

Perhaps this will come out in Bali, but I'm not holding my breath.

Global Climate Change: Glen Barry's pre-Bali Essay Calls for Equitable Emissions Cuts

Before the Bali Climate Talks begin next week, everyone should read the latest Earth Meanders essay by Dr. Glen Barry, called "Poverty Sucks, the Earth and the Soul."

Barry writes that "To avoid run-away abrupt climate change, all nations must embrace equitable, ambitious and urgent emission cuts in Bali.

"The rich are richer and the poor, poorer -- even as the Earth they share shrivels and dies. Billions live a life of misery on a dollar or two a day, as a sizeable minority enjoys creature comforts fit for kings of old, and a relative few with more wealth then entire nations live in unimagined splendor...

"Humanity is well along the path of cutting and burning ourselves to oblivion. The combined filth from centuries of burning fossil fuels and clearing native vegetation -- primitive practices that continue to this day -- is causing the climate and global ecology to not only change, but collapse...There is perhaps Bali and a few years to get policy right to reduce emissions and avoid total global ecological decline through cooperative international policy-making..."

Read the full essay

Source: Climate Ark

Clean Tech: First Solar buys Ted Turner's Renewable Play

First Solar, Inc. (NASDAQ:FSLR) announced that it has acquired Turner Renewable Energy, LLC for a purchase price of approximately $34.3 million paid in a combination of common stock of First Solar, Inc. and cash.

The company will operate as a wholly owned subsidiary of First Solar, Inc. under the name First Solar Electric, LLC. Turner Renewable Energy, LLC has operated under the name DT Solar, a Turner Renewable Energy Company, since January 2007 when entrepreneur and philanthropist Ted Turner invested in the company.

DT Solar has designed and deployed commercial solar projects for utilities and Fortune 500 companies in the U.S. since 2004. The acquisition brings to First Solar a team of people experienced in the development of independent power projects, marketing of energy, and operation of commercial power plants in the United States.

Source: Clean Edge News