Braemar Energy Ventures Finds Value in Energy Technology, Both Clean and Conventional

6/22/11Follow @arleneweintraub

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$3.7 billion in 2010. “It was the number two sector behind biotech and about even with IT,” DePasquale says. And it almost matched cleantech’s banner year, 2008, when the sector raised $4 billion. “The dollars going into cleantech are still robust.”

Investments in energy infotech continue to grow, according to Anand Sanwal of CB Insights, a New York company that collects data on venture and angel investments in private companies. “If the trend continues, we’re looking at a record year,” he told the crowd at the Energy Infotech Forum, which was held at the New York Academy of Sciences.

Braemar has proven that cleantech investing can pay off for VCs who make early bets on innovative solutions. Other Braemar investments that have gone public include lithium-ion battery maker A123 Systems (NASDAQ: AONE), and Verenium (NASDAQ: VRNM), which makes industrial enzymes from bacteria and fungi.

On May 27, Braemar portfolio company Solazyme (NASDAQ: SZYM) went public and saw its shares soar 15 percent to $20.71 in its first day of trading. The South San Francisco-based company, which raised $198 million in that IPO, uses biotechnology to create renewable oil from certain strains of algae. The company also has a joint venture to market algae-based nutritional products, such as oils and powders, to consumer food manufacturers. “Selling a nutraceutical product is a wonderful hedge for the business,” DePasquale says. Overall, he adds, Solazyme represents all the ingredients of a good energy investment: “Multiple markets, multiple access points to scale the business, and novel technology.”

Braemar’s VCs lean heavily on their advisory board, which includes nine veterans of the energy and technology industries. Among them: David Fitzsimmons, former CEO of BP’s international oil trading business, Eugene McGrath, retired CEO of Con Edison, and Mohammad Al-Ramadhan, the president of KPC Ventures, the technology investment arm of the Kuwait Petroleum Corporation. “We have a lot of deep expertise, and that helps our portfolio companies develop their strategies,” DePasquale says.

While it’s unlikely they’re going to invest in consumer space travel anytime soon, Braemar’s VCs continue to maintain an open-minded attitude towards energy investing. They’re seeking opportunities in both technologies that improve old-line oil and gas industries and those that seek to promote energy alternatives, DePasquale says. “We remind people that oil and gas is still going to be a predominant part of the energy mix for the foreseeable future,” he says. “We have to find a way to invest in the renewable space but not ignore the things that are driving the economy today.”

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