SJF Ventures led a $4M Series A round for Community Energy Inc. (CEI) this week, see the press release below. We are thrilled with the CEI investment and its alignment with SJF’s mission and strategy. We call our cleantech investing strategy ‘capital efficient expansion’ as versus the ‘large technology bet’ approach of many larger cleantech funds. (I have previously written about this as a ‘today’ vs ‘tomorrow’ strategy.)
Here are my ‘top ten’ reasons that CEI is a good SJF cleantech investment:
1) Proven team – The CEI management team of Brent Alderfer, Eric Blank and Brent Beerley have worked together for nearly ten years and have recently been joined by David Giordano and Tim Heinle, who bring top-class project finance and renewable development expertise. The CEI team developed some of the first commercial wind farms in PA, NJ, IL, NH and MO, generated a nice return for previous investors in the company sale to Iberdrola, and have now spun back out the firm to ‘do it again’ in large scale solar development.
2) Commercial revenues – CEI has built a renewable power marketing business in partnership with utilities in 21 markets serving 17.5 million electric customers throughout the Northeast and Mid-Atlantic, including ConEd Solutions, National Grid, PPL, NYSEG, PSEG, and PECO. This operating business provides the scale, credibility, utility partnerships, and profitability that has allowed CEI to build a robust solar development pipeline.
3) Capital efficient – The CEI team is very focused on leveraging the development capital markets effectively for their solar and wind projects and keeping corporate capital (bolstered by this Series A raise) separate and focused on growing their overall enterprise and pipeline.
4) Utility partners – Unlike many energy tech companies we see at SJF that either are looking to ‘replace the utility’ or just starting to figure out how to market to utilities, CEI has been a partner in helping utilities market, develop, and utilize renewable power for more than a decade. They realize that utilities have a huge incumbent advantage and to achieve scale it is best to help the utilities find a way to make renewables and efficiency profitable.
5) Proven, existing technologies – CEI is not betting on a particular solar (or wind) technology, but rather leveraging the best of class technologies globally into their projects. CEI’s proprietary advantage is rather their access to utilities and their customers, project finance capability, state and PUC policy expertise, IPP power development experience and pipeline, brand, and team.
6) Leverages SJF and co-investor expertise – SJF brings solar expertise to CEI (I co-founded and ran a solar thermal company in the early 1980′s and SJF led the Series A for groSolar in 2006) and renewable energy project expertise (Cody Nystrom with SJF previously was with Ewing Bemiss and worked on several large scale renewable project finance transactions.) Secondly, we are partnering in this Series A financing with NGP Energy Technology Partners, a large, successful energy fund with deep solar expertise (investors in Satcon, Xunlight) and have been a strong partner with SJF in groSolar.
7) Fits SJF’s ‘Alignment Advantage’ – In addition to companies with the merits described above, at SJF we look for companies that align well with SJF’s philosophy of pursuing cleantech and positive impact innovations that ‘change the world for the better’ and drive business success. CEI certainly had multiple corporate financing options, but the SJF and CEI teams were well aligned both on the core business objectives and the broader mission and values.
8 ) Off the beaten track – SJF specializes in investing in companies that are in areas not overrun with VCs (Silicon Valley, Boston.) For example, a recent successful cleantech exit for SJF, Salvage Direct, is based in Titusville, PA out in western Pennsylvania. While CEI is headquartered on the mainline west of Philly (Radnor, PA) which is certainly an area with other VC financed companies, they are developing large scale solar farms in regions of the Northeast, MidAtlantic and Midwest that have yet to see utility scale solar on this scale… unlike the very competitive CA market, with active players like Recurrent, Solar Power Partners, SunPower, First Solar and others .
9) Policy engagement – At SJF we have launched the SJF Institute to help ‘entrepreneurs change the world for the better’ and in part this is through changing state and federal policies to accelerate a green economy. CEI is also active in promoting policies to implement the clean energy transition more rapidly.
10) Sense of humor – One of our core values at SJF is to ‘Take our work seriously, but not ourselves’ and in the multiple diligence meetings with the CEI team, it was clear they share this SJF cultural quirk of having a sense of humor combined with an intense focus on results.
Thanks to Cody Nystrom of SJF Ventures worked alongside with me on the CEI investment, bringing her deep experience in renewable energy and project finance. Thanks also to AJ Dye, SJF’s MBA Associate this year from UNC Kenan-Flagler Business School, who worked especially hard on CEI due diligence this summer.
If you see any cleantech companies raising equity capital that sound a lot like the CEI example above, send them on! Here is the official press release:
SJF Ventures and NGP Energy Technology Partners Invest in Community Energy, Inc.
Leading Renewable Energy Developer Closes Series A Investment
(Radnor, PA October 5, 2010) – SJF Ventures, joined by NGP Energy Technology Partners (NGP ETP), completed a Series A Preferred Stock investment in Community Energy, Inc. (CEI), a leading renewable energy developer and marketer. The investment will fund CEI’s plan to expand its pipeline of utility scale solar generation projects under development in the Northeast, Mid-West, and West. In announcing the Series A funding, the Company emphasized the strategic relationships with these two firms as it moves to expand its solar project pipeline. “SJF and NGP ETP bring the industry-leading credentials and depth in the energy industry that we were seeking as we scale up our solar development plan,” said CEO Brent Alderfer; “We have a 10-year track record of building on strategic partnerships to develop renewable energy projects, and these two investment partners are among the best in the business.”
“In the past, we’ve looked at the renewable energy project development space, but haven’t found a match until now,” said Chris Sorrells, Managing Director at NGP Energy Technology Partners. “We are pleased to join SJF Ventures in backing a very proven management team to aggressively pursue utility scale solar development in their target markets.”
SJF Ventures led the Series A investment totaling $4 million, with an option to invest another $2 million. “We liked the seasoned leadership team at CEI, and their 10-year track-record of success in early-market renewable energy development and renewable power marketing,” said David Kirkpatrick, Managing Director of SJF Ventures, who has joined the CEI Board of Directors. “The solar power market is just opening up at scale, and we look forward to advancing that market with Community Energy.”
About SJF Ventures.
SJF Ventures is a venture capital fund with offices in Durham, NC, New York and San Francisco. SJF has an eleven-year successful record of assisting visionary and talented management teams in building industry-leading firms. SJF provides strong expertise and networks in the cleantech, sustainability and technology enhanced services sectors, including particular experience in renewable energy. SJF portfolio firms include groSolar, CleanScapes, eRecyclingCorps, Fieldview, MediaMath, ServiceChannel, and Ed Map. For more information, visit www.sjfventures.com.
About NGP Energy Technology Partners.
NGP Energy Technology Partners established in 2005, is a leading private equity firm investing equity capital for growth and buyout transactions for companies that provide products and services to the oil and gas, power, energy efficiency, and alternative energy sectors. NGP ETP, with $496 million in capital under management, is managed by investment professionals with extensive experience investing in virtually all types of energy technology and a strong track record of identifying strong management teams and working with them to create significant value. NGP ETP is affiliated with NGP Energy Capital Management, a $9.5 billion firm that has been a leading investor in the natural resources sector since 1988. NGP ETP is headquartered in Washington, D.C. and has offices in Irving, TX and New Orleans, LA.
About Community Energy, Inc.
Community Energy, Inc. (CEI) has been leading renewable energy development since its founding in 1999. By launching the market for direct sales of renewable energy to retail electric customers, CEI first leveraged electric choice to build demand for new renewable projects, and went on to deliver wind energy at significant scale. In 2009, CEI expanded into solar project development, focusing on utility-grade projects in advancing solar markets. CEI continues to lead the industry by offering the full economic and environmental advantages of solar and wind energy to its array of customers and utility partners. The Company has a proven track record of delivering on its mission of a renewable energy future that works for its customers, partners and investors. For more information, visit www.CommunityEnergyInc.com.