The California Clean Energy Fund (CalCEF), a new $30 million public benefit investment fund created as part of the Pacific Gas and Electric’s bankruptcy settlement, announced agreements with three leading venture capital firms: Nth Power, Draper Fisher Jurvetson and VantagePoint Venture Partners.
These venture funds, with combined assets under management of $6 billion, will bring added value to CalCEF including matching funds and access to key strategic partners. The purpose of the evergreen non-profit Fund is not only to make attractive investments, but also to provide an engine of economic growth while reducing California’s dependence on fossil fuels. “With this new Fund, we have the opportunity to shape the future of clean energy investments by demonstrating wins for both investors and our environment,” said Michael R. Peevey, chairman of CalCEF and President of the California Public Utilities Commission (CPUC).
CalCEF’s cross-disciplined Board of Directors enables a focus on this promising investment sector in ways that a traditional fund cannot. “This Board, which blends public policy makers, investment professionals, entrepreneurs, and science and technology experts, is uniquely able to meet this investment challenge,” said Lisa Bicker, president of CalCEF. “The time is right for clean energy investing and CalCEF can be the change agent that leads the way.”
CalCEF’s investment strategy will focus exclusively on clean energy, including renewables, energy efficiency, energy storage, and enabling technologies and services. Under the terms of the agreements, the venture capital firms will make equity investments in clean energy companies on behalf of CalCEF. By working with three highly qualified investment firms, each with their own investment expertise, CalCEF can take a blended approach to the market that mitigates risk and maximizes returns. The goal is to support a wide range of opportunities, including both later stage and early stage opportunities, where CalCEF funding will make a difference.
CalCEF has allocated $8.5 million to each of the three funds for a total of $25.5 million. Nth Power and Draper Fisher Jurvetson (DFJ) will each directly manage an investment portfolio totaling $8.5 million, with Draper Fisher Jurvetson’s allocation to be managed through DFJ AltaTerra, a DFJ affiliate fund launched to make investments in the clean technology sector. These managers will also match each dollar invested on behalf of CalCEF with its own investments in order to maximize market impact. CalCEF will also participate as a limited partner in VantagePoint Venture Partners. The remaining $4.5 million has been reserved by the CalCEF Board for future program development.
Nth Power estimates that venture capitalists invested approximately $500 million in US-based energy-tech companies in 2004, representing well over 2% of all VC investing. California is well positioned to take the lead in this emerging market thanks to its strong technology base, entrepreneurial talent, access to capital and enlightened environmental policies.
“Clean technologies — including clean energy technologies — are emerging as one of the most exciting and promising sectors for investment,” said Raj Atluru, Managing Director of Draper Fisher Jurvetson. “DFJ has consistently been a leader in identifying and capitalizing on emerging investment areas, and we are excited to work with CalCEF as we launch DFJ AltaTerra as a new venture fund dedicated to clean technologies.”