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FINANCING REVOLUTIONARY ENERGY SYSTEMS
Posted on Friday, November 28, 2003 @ 12:47:49 GMT by vlad
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Overtone writes: Many venture capital firms seek products with markets that exceed $1 billion per year. Yet, although the potential markets for breakthrough renewable energy systems far exceed that figure, firms and inventors seeking support have an extremely difficult time finding funds. Although, Magnetic Power Inc. (MPI), has raised more than $7 million to date from Angel investors, most, (70%), of that total has been for the work of our subsidiary, Room Temperature Superconductors Inc. (RTS). The remarks below may be of general interest.
Only a very tiny minority of companies of any kind find support from the numerous institutional venture capital funds. These funds, with the exception of the dot-com bubble period during the 1990s, have rarely been truly venturesome. For the most part they follow, rather than lead, trends in technology. They understandably always look for experienced entrepreneurs, with a strong track record. They seek individuals who have taken a previous company through the complexities of an IPO, or completing an acquisition by a larger firm. These so-called “liquidity events” provide an exit. You will rarely see any company funded without a clear cut exit strategy. As a general rule, this focus on the management team, and an exit strategy, is of more concern to the majority of investors than the technology.
By far the overwhelming quantity of risk capital in the American economy comes from Angel investors. These are individuals, who sometimes are part of small groups. They typically invest between $25,000 and $750,000 in the seed and start-up rounds of finance. Angels usually meet the SEC accreditation requirement by having a net worth of $1 million or more, although the accreditation prerequisite can also be met with a sufficiently high income. They are often, or have been in the past, successful entrepreneurs.
Angels often expect their investments will be followed, in later rounds of finance, by institutional venture capital. In any new field this compounds the problem, since it can be hard to find either venture capital funds, or Angels, that feel competent to evaluate the risks of breakthrough new science.
Large companies sometimes have venture capital available in-house. Since their primary interest is in the future availability of the technology, rather than a purely financial return, the terms of their investments can be more generous than the large bite of equity ownership in any company normally required by an early stage venture capital fund investment.
The Small Business Innovation Research (SBIR) program, of the U.S. government, awards upwards of $1 billion each year for early stage research and development. See for example, http://www.aip.org/tip/INPHFA/vol-1/iss-2/p34.pdf. Note that the Missile Defense Agency, (formerly known as the Ballistic Missile Defense Organization), has a category called “surprises and opportunities”. MPI and RTS have completed four SBIR contracts in connection with our Ultraconductors. (See www.ultraconductors.com) One of those was awarded under that noteworthy category. Phase I awards are $100,000 or less. Phase II awards can be as large as $750,000. (RTS won three Phase I, and one Phase II awards). In our experience, Department of Defense agencies are far more open to radically new technology than other parts of the U.S. Federal government.
Canada has a remarkable funding agency for technologies that promise a reduction in Greenhouse gases. See the website: www.sdtc.ca for detailed information. American inventors and firms can partner with Canadians, to receive early stage funding on generous terms. This is a relatively new, quite remarkable, organization. It would seem worthy of being paralleled in the U.S. and every country, or jurisdiction, concerned with the problems of finding breakthrough alternatives to the fossil fuels.
Innovaive funding organizations are at last being formed in the U.S. to address the gap that presently exists between what is needed, and what is required, to address the extreme urgency of the energy problem. Included are such innovations as a non-profit venture capital partnership.
The author has been raising capital for breakthrough energy systems, on a full-time basis, since 1973, when he began AESOP Institute, a non-profit research organization to find alternatives to fossil and uranium fuels. Previously, he was a consultant to the Economic Development Administration, of the U.S. Department of Commerce, with a Contract to search for, and suggest, new approaches to venture capital. Prior to that, he was a consultant on economic development to the New York office of the late Senator Robert F. Kennedy. He was the founder, Chairman & CEO of SunWind Ltd., a renewable energy company combining solar and wind energy from 1975 to 1983. He founded Magnetic Power Inc., in 1984, to focus on magnetic conversion of Zero Point Energy and other forms of energy from the Active Vacuum. He co-founded Room Temperature Superconductors Inc., in 1993, as an MPI subsidiary.
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Re: FINANCING REVOLUTIONARY ENERGY SYSTEMS (Score: 1)
by ElectroDynaCat on Friday, November 28, 2003 @ 17:20:30 GMT
(User Info | Send a Message) | Dear Overtone
Risk capital is an understatement. This represents one of the all time long plays in the history of investment. Not only is the technology not developed, most of the scientific community says that what is being proposed has absolutely no chance of functioning as an energy source. Investing in this field is akin to investing in Apple Computer before the invention of the transistor, the "Angels" you speak of must have absolutely no idea what to do with their money. The area of ZPE power is not yet ready for any type of money for the development of marketable systems, most of the ideas are half baked, mathematically abstruse creations that produce results because their inventors can't measure energy output correctly. It is not my intention to say that a ZPE device is impossible, it just that we don't have the technology or the knowledge to get one to work at the present. Even our theoretical knowledge of ZPE is confused and muddled, no one can even create a set of field equations that describe ZPE on the same terms as Maxwell could for Electromagnetism. More than money is needed to make progress in this field, there is still some basic insight into the nature of this mystery than needs to be revealed. It may be a simple, but most unexpected vision of nature, almost an epithany for its discoverer. |
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