The Northwest Energy Angels are closing 2012 with a bang, leading a $2.4 million investment in Ethical Electric, a startup clean energy retailer.
It’s a deal that exemplifies some trends for the longest-tenured cleantech angel group in the country, which touted a record year at its annual holiday showcase Thursday night in Seattle.
Updates from portfolio companies also revealed new fundraising by MicroGREEN Polymers, which is commercializing a University of Washington technology, Seattle-based OneEnergy Renewables, and more details about Propel Fuels’ latest round.
Eight Northwest Energy Angels (NWEA) members are investing $314,000 in Ethical Electric, including Brian Arbogast, who is joining the Washington, D.C.-based company’s board of directors. This year, the group encouraged companies that have raised at least $100,000 from NWEA members to allow other members to participate at a lower minimum investment. Arbogast says this was the first deal to go forward under that model.
The investment in Ethical Electric also points to NWEA’s broadening geographic reach—something that may be reflected in a re-branding exercise the group is undertaking, says co-chairman Byron McCann.
Tom Matzzie, Ethical’s chief executive, says the NWEA is “uniquely positioned” in the nation as a cleantech-focused angel group, making the decision to seek funding from them a “no-brainer.”
There is growing interest in cleantech among some other angel groups—including the Band of Angels and the Angel Capital Association. The NWEA has just formed a co-investment committee to formalize its work sharing incoming and outgoing deal flow, both locally and nationally, says NWEA co-chairman Lars Johansson.
“This is really outreach to VC firms as well as to other angel groups,” he says.
The NWEA, organized in 2006, has grown to 67 members.
Johansson says it hasn’t tallied its total investments for 2012—and there are more deals to come in the waning weeks of the year—“but I can say that it looks like for sure it will be a record year both in terms of new investments and in terms of follow-on investments.”
NWEA’s members have invested in excess of $8.6 million in 38 companies over the last six years. Their role in capital formation for Northwest cleantech entrepreneurs will only grow in importance with the shut down of OVP Venture Partners, which had a long history of supporting cleantech startups.
NWEA members heard updates from about a dozen companies last night. Here are some highlights:
—Ethical Electric will make its commercial debut in Pennsylvania, New Jersey, Maryland, Washington D.C., and Delaware, by February, Matzzie said in a phone interview prior to the NWEA event. In these deregulated electricity markets—and about 10 others across the country—consumers can choose an electricity supplier separate from the local utility that delivers energy to the home. Ethical’s model is to sell 100 percent clean energy, using modern marketing techniques and affinity partnerships, including one in the works with the Sierra Club, to recruit customers. Matzzie, who worked previously with MoveOn.org, says Ethical will be cost competitive on price because it can be more flexible than the utilities in procuring energy.
He acknowledges that this is already a crowded field. Many utilities offer clean energy purchase programs themselves. But Ethical intends to cut through the red tape of enrolling in these programs.
“Our bet, in part, as a business, is there’s a lot of value in making buying clean energy easy,” Matzzie says.
—Arlington, WA-based MicroGREEN Polymers is in the midst of raising $20 million to support commercialization of new food-packaging products made from recycled water bottles using a UW technology, says Krishna Nadella, co-founder and chief technology officer. Virgin America and Alaska Airlines are testing a new coffee cup that could unlock a very large market, he says. The 10-year-old company recently closed a $1 million licensing deal in South Africa and expects to be profitable in the fourth quarter, Nadella says. The company also aims to grow its staff from 50 to 200 by mid 2014.
—OneEnergy Renewables, which makes a software platform for trading renewable energy credits and uses the revenue to fund utility-scale project development, just closed a $2.1 million equity round, says chief operating officer Travis Bryan. (Details in this SEC filing.) The Seattle-company expects to be cash flow positive in 2013. It recently commissioned a 5 megawatt dairy digester project in Oregon, and is turning its project development attention to mid-sized utility scale solar projects in the 2-20 megawatt range. It is negotiating to sell power to utilities, but also focusing on sales directly to large energy buyers such as universities and businesses.
—McCann, an investor in Propel Fuels, says that despite the struggles in the biodiesel market on the supply side, retailers are still standing. Propel, which started out in Seattle before moving its headquarters to Redwood City, CA, on Tuesday closed a $21 million round including $11 million of Series D equity from existing investors Nth Power, Craton Equity Partners, and @Ventures, and new investor, Gentry Venture Partners, plus $10 million in debt financing from CapX Partners. McCann says the company also has some $22 million in grants from the Department of Energy and California to expand its network of biofuel stations, adding 75 in the Golden State in the next year. It currently has 24 in California and six in Washington. “So this is really a tremendous story for an industry segment that looked like it was totally on its lips,” McCann says.
