Northwest VCs React to Prometheus Energy’s Funding and Partnership with Shell

7/7/09Follow @gthuang

Last week, we reported that Prometheus Energy, the Redmond, WA-based liquid natural gas producer, closed a $10 million investment from Shell Technology Ventures in a deal that is still resonating in the local alternative energy community. Prometheus, led by co-founder and chief executive Kirt Montague, has gone through many ups and downs since its formation in 2003. Now, through a strategic partnership with Big Oil, the company is looking to go global with its technology for taking methane gas from landfills and other waste sources and converting it into relatively clean-burning liquid natural gas fuel.

I heard from a couple of Northwest cleantech venture capitalists who commented on the significance of the deal. To me, their reactions help underscore the importance of finding the right partner at the right stage in a company’s life, especially in the tricky world of alternative fuels.

From Gregg Semler, co-founder and managing director at Portland, OR-based Pivotal Investments:

“I think it is an important deal from many perspectives. It not only validates the business opportunity for waste to energy deals but it demonstrates how important startups can be to the innovation cycle for global companies like Shell. As you know, a lot of cleantech is disrupting very large, global markets where the major competition is already well established. It can be challenging for startups to break in to an existing market. This demonstrates that companies like Shell are strongly motivated to do deals with innovative companies like Prometheus. As part of the aligning of interest, often times they will provide the necessary capital to get to the next stage of validation. Often times this kind of relationship is compelling to venture investors and helps if you are trying to raise additional venture capital. There are many other waste to energy companies in the Northwest as well as other startups where corporate partnering makes a whole lot of sense. It is not an easy time to be raising capital. This deal should motivate other early stage clean tech companies to source strong strategic corporate partners that can make a difference to achieve their goals.”

From Rick LeFaivre, managing director at Kirkland, WA-based OVP Venture Partners:

“I applaud Kirt for hanging in there and landing a strategic investor. Alternative fuel ventures quickly become ‘project build out’ deals that require lots of capital to build plants. They typically aren’t early-stage venture deals, which is why we tend to steer away (which is not to say they won’t be good investments for someone—just not us). Bringing in a strategic partner who can invest the capital required to scale the business is exactly the right way to go. This differentiation is important: I continue to hear discussion about ‘the lack of early-stage venture capital in the [Pacific Northwest] for cleantech ventures.’ The reality is that firms like OVP are actively looking for early-stage ventures in this space, but that typically means a leveragable technology platform that leads to profitability on a modest amount of investment with significant upside potential, vs. large project finance opportunities that require hundreds of millions of dollars to scale the business. It’s not that one model is ‘better’ than the other, but rather they are different kinds of investments, requiring different kinds of investors.”

“Bottom line: great to see another Seattle-based cleantech deal get funded, and it sounds like the funding came from the right kind of investor.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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  • http://krassend@gmail.com Krassen Dimitrov

    Rick LeFaivre: ‘…profitability on a modest amount of investment with significant upside potential, vs. large project finance opportunities that require hundreds of millions of dollars to scale the business.”

    Meanwhile, from a OVP-funded company:
    “Complete Genomics’ prototype genome center will cost an estimated $75 million. Reid then plans to build a further 10 centers – for about $50 million apiece – in the U.S. and abroad over the next five years”

    http://sourcebook.bio-itworld.com/BioIT_Article.aspx?id=82058

    You can always count on OVP for prime-grade BS.

  • Lumpyspun

    Since when have we started referring to LNG as cleantech? Sure it’s cleaner than petroleum/gasoline, but cleantech? It is still a non renewable resource that only gets you to about 25% less GHG emissions than oil fuel.

  • http://dawnmarcelle.com Dawn

    History for ya:
    In 1999 I worked with a company called Cryofuel Systems whose CEO was Dr John Barclay, thier Information Specialist was Mirek Skirpkowski and thier Corporate Attorney was Kirt Montague. They claimed to have dozens of LNG liquefaction units producing inside the Bowerman Landfill and the LNG was being used to fuel the landifll trucks.

    NOPE. None of that was true, so they started over and renamed Cryofuel to Prometheus Energy where Kirt Montague became CEO while Dr John Barclay acted as Information Specialist and Mirek Skirpkowsi took the post of Advanced Development Manager. Prometheus claimed to have dozens of LNG liquefaction stations all over the Bowerman landfill, they claimed they were producing 5,000 gallons of LNG every day and supplying the landfill trucks.

    NOPE. None of that was True.

    Calls were made to the General Manager at Bowerman, the California Transit Authority, the Integrated Waste Management office of Orance County and the Operations manager at the Kiefer landfill as well as Prometheus HQ.

    Prometheus only had one liquefaction station at Bowerman and it wasn’t producing any LNG according to the Transit Authority, Intgrated Waste Management office and the Bowerman GM.

    Montague, Barclay and Skirpkowski haven’t changed thier mode of operation since thier days at Cryofuel Systems. These are cookie cutter scams.

    Do the math.

    • Guest

      Dawn – I’d like to discuss further with you offline…

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