Boston-based venture firm Rockport Capital is upping the ante on cleantech investing. The six-partner firm, which has focused since its founding eight years ago on cleaner and more efficient energy and production technologies, announced today that it has finished raising its third fund. It’s Rockport’s largest fund by a long shot, weighing in at a hefty $450 million (compared to the $385 million it gathered for its previous two funds combined). “We believe that makes it the largest fund solely dedicated to cleantech investing that’s ever been raised,” says general partner Janet Burrows James.
Plenty of local venture firms are putting money into technologies such as biofuel production methods that don’t depend on food crops, cleaner ways of burning coal, and solar cells that turn more of the sun’s energy into electricity. But Rockport’s new fund raises the bar substantially, especially when compared to the $273 million in venture money raised by all Massachusetts cleantech startups combined in 2007.
I asked James what sets the new fund apart—other than its size and its cleantech focus. But Rockport is hard to pin down, as it turns out. “We have a very broad focus,” James says. Unlike many venture firms, Rockport is “agnostic” about the stage of growth that its target companies are at, and it doesn’t limit its investments to companies in any particular geographical region. (It opened an office in Menlo Park, CA, last year to help stay in touch with the 40 percent of its portfolio companies that are based on the West Coast, James says.)
The company’s only real concentration is on a trio of fields that it describes as energy and power technologies, advanced materials, and “process and prevention,” meaning technologies that mitigate the environmental impact of industrial processes by reducing inputs or waste. But a quick glance at Rockport’s list of 28 portfolio companies shows that few fit neatly into just one of these three boxes. Most, in fact, seem to span all three—which isn’t terribly surprising, since new materials and processes are often a key part of clean energy technologies. For example, Portsmouth, NH-based Powerspan, is developing electro-catalytic oxidation systems that remove pollutants from flue gas at coal-fired electrical plants, in the process producing an ammonium sulfate compound that can be used as fertilizer.
Rockport raised its first fund of $125 million in 2001, and closed its second fund of just over $260 million in January, 2006. That fund is now fully invested in portfolio companies, so the time was right to start a new fund, James says.
Raising cash for the third fund was easy, she says. “We like to joke that this is the lowest-carbon-footprint fund raise that has ever been done,” she says. “We didn’t undertake road shows—we basically raised the funds from our existing investors and from interested outside investors who had been following Rockport and cleantech for the last couple of years.”
James calls the fund’s limited partner investors, a group that includes endowments, foundations, pension funds, and funds of funds, “a real blue-chip roster that we’re very excited about.”
