Funding the commercialisation of cleantech Ivor Frischknecht Investment Director 26 May 2011

The Commercialisation Process Research Product Prototype Pilot Early Customers Commercial Rollout Research Institute Company/ Research Institute Company Company/ Project Vehicle/ Partner Spinout License Needs Analysis Product Packaging Commercialisation

Private Equity Investing in Cleantech Buy Out Project Finance Growth Capital Offshore Venture Capital Australian Venture Capital Startmate, Angels <$1M $1M - $20M $20M – $100M >$100M Investment Amount

About Starfish Ventures AUD$400 million under management Investments in 60+ companies: ITC, Life Science and Clean Technology Exit track record: 6 ASX IPOs, 2 NASDAQ IPOs, 1 AIM, 10+ Trade Sales, 1 Backdoor listing Pioneer the migration of Australian companies to the US to access capital, markets and experienced executives Investment team of eight, two have a cleantech focus

Venture Capital is a Risky Business $1 Billion invested, all lost in 18 months

Sometimes they succeed 1999: first VC funding 2006: NASDAQ listing Market Cap: USD$10.67B Revenue: USD$2.56B Profit: USD$762M It manufactures photovoltaic solar modules using a thin film semiconductor process based on CdTe, to produce photovoltaic modules. It is the largest manufacturer of thin-film cells in the world[1], with production capacity expected to reach over 1 GW per year by the end of 2009. Funded in large part by True North Partners – investment arm of the Walton family (Walmart) Info on First Solar: http://www.marketwatch.com/story/first-solar-ipo-shines-as-energy-picks-up-steam *Financial information as of 25 May 2011

Sometimes they succeed 1989: Secured first VC funding 2005: NASDAQ listing 2006: first profitable year Market cap: USD$2.08B Revenue: USD$2.21B Profit: USD$183M SunPower Corporation designs and manufactures high-efficiency , roof tiles and solar panels based on a silicon all-back-contact solar cell invented at Stanford University. Sunpower info: http://www.answers.com/topic/sunpower-corporation-public-company *Financial information as of 25 May 2011

Valuation Founders: “My company will be a big success” Investors: Portfolio Approach aim for successes only high failure rate return across all investments must exceed public market returns

Competitive Advantage Market size and Growth - REVC Growth Capital Investments Selection Criteria Contributions Management Team Technology Competitive Advantage Market size and Growth - REVC Growth Capital Recruiting Corporate Governance Strategy Partnerships International Market Entry Exit

Opportunities

Opportunities Solar Energy Wind Management/ Optimization What’s Hot What’s Not Solar Energy Wind Management/ Optimization Demand Management Energy Efficiency Energy Storage Fuel Cells Hydrogen Biofuels Waste Management Water Efficiency

Cleantech Industry: VC outliers Too Early Too Big Next Generation Biofuels Electric Vehicles Ocean Power Carbon Capture & Storage Utility scale renewable projects Too Late Too Small Wind Turbines Fish tracking software Services that don’t need much capital

Cost of Solar Power Source: McKinsey Quarterly

Limited Local Commercialisation Success Australian Solar Power Strengths R&D Powerhouse Limited Local Commercialisation Success Sliver cells (Origin Energy) Dyesol (ASX : DYE) Suntech (NYSE/China) JA Solar (NASDAQ/China) Nanjing PV (China) CSG Solar (Germany) Basic IP for dominant silicon PV UNSW and ANU are top groups internationally Supporting efforts elsewhere

Case Study: Pacific Hydro Founded in 1992 ASX IPO in 1993 at $10MM market cap Mid-1995 market cap dips to $3.5MM Two private placements raised $30MM Acquired by IFM in 2005 for $788MM

Case Study: Suntech Founder is Chinese Australian dual-national educated at the University of NSW Much of the IP and technical talent originate in Australia Active personnel exchange program with the University of NSW 2005 NYSE listing Market cap of USD$1.38B Revenue: USD$2.90B Profit (before tax): USD$10.9M *Financial information as of 25 May 2011

Policies Make a Difference California California Energy Use per Capita Source: California Energy Commission, 2007 Integrated Energy Policy Report

California Solar Policies Subsidies US$3.2B Rebates Tax Credits Home mortgage deduction Net metering Public Purchasing Policies Has led to: 30-40% of North American investment in cleantech 20,000 new jobs (solar only)

In Closing Early stage clean technologies are well suited to venture capital Capital requirements and timeframes can be a challenge Quality inventors for the capital required Australia has a lot of capital and good clean technologies More stable policies are required to overcome financing challenges REVC will greatly expand renewable energy capital

Ivor Frischknecht Investment Director Starfish Ventures Level 1, 120 Jolimont Road East Melbourne, VIC 3002 T: +61 3 9654 2121 www.starfishvc.com