Fallbrook Technologies Files for $50M IPO

2/16/10Follow @bvbigelow

San Diego’s Fallbrook Technologies, a cleantech venture developing a proprietary transmission that offers improved efficiency for a variety of vehicles, intends to raise $50 million through an IPO, according to a filing today with the Securities and Exchange Commission.

A Fallbrook spokesman declined to comment on the stock offering.

In its filing, Fallbrook says its “NuVinci” design (for a continuously variable “planetary” transmission) can be used in automotive accessory drives (such as air conditioning compressors), and as the primary transmission in electric vehicles, bicycles, riding lawn-mowers, and small wind turbines. While the specific benefits vary with each application, Fallbrook says its technology can lower overall energy costs in each of these areas by improving performance and fuel economy.

The company previously told me its technology also is well-protected by patents, which is unusual because the big three automakers typically dominate technology innovations in the auto industry. In its filing, Fallbrook says it holds 85 U.S patents, and has another 61 pending. It also holds 71 foreign patents, with 147 pending.

The company says it has raised about $55 million from investors since it was officially founded in 2000 as Motion Systems Technologies. It was renamed Fallbrook Technologies in 2004. Individual investors funded Fallbrook’s operations for more than a decade, until the company raised $29.4 million last year in its first venture round. The filing shows that entities associated with Robeco, the investment arm of Rabobank of The Netherlands, have a 24 percent stake in Fallbrook. NGEN Partners, a Santa Barbara cleantech venture firm, holds about 23.7 percent, and entities associated with Qualcomm scion Gary Jacobs have a 12 percent stake.

Fallbrook said it generated almost $2.3 million in revenue in 2008, primarily from licensing fees and sales of its bicycle transmission. The company has never been profitable, though, and posted a net loss of $10.5 million that year, according to the filing.

In the first nine months of 2009, Fallbrook said its sales dropped to just $871,000—about half its revenue rate through the same period in 2008—primarily due to a decrease in licensing fees and engineering services. It was at this same time that Fallbrook decided to change its corporate strategy from a model that was based on licensing its technology to a straight contract-manufacturing business.

In its filing, Fallbrook identifies the following markets for its NuVinci transmissions:

—Automotive Accessory Drives: Fallbrook says its NuVinci transmission enables motorized accessory drives—such as alternators and air conditioners—to maintain an optimal operating speed regardless of whether engine speed is increasing or decreasing. The company estimates the global market for accessory drives at $2.4 billion.

—Electric Vehicles: Fallbrook says its technology enhances the commercial potential of electric vehicles, and estimates its potential global market in the sector at $1.2 billion. Fallbrook says its transmission improves EV battery life and increases operating range.

—Bicycles: Fallbrook says its NuVinci design allows a rider to shift seamlessly. The company, which estimates the global market at $1.1 billion, says it expects to sell 24,000 of its bicycle transmissions this year.

—Lawn Care Equipment: Eyeing what it estimates is an estimated global market of $65 million, Fallbrook says its transmission can reduce fuel consumption, emissions, and noise in lawn mowers and other lawn care equipment.

—Small Wind Turbines: Fallbrook says the NuVinci can improve the amount of energy captured by these turbines. The company estimates the global market at $1 billion.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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