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Will Weak Greentech IPOs in 2010 Sour the Market?

by Katie Fehrenbacher on March 8, 2010

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Last week at the Wall Street Journal’s ECO:nomics conference, famed venture capitalist Vinod Khosla said one of the things he was worried about was that too many companies “under the green banner,” would go public and “set up a set of expectations,” and “miss them.” In other words, he’s worried that some greentech firms going public in 2010 will not be successful and will sour the market.

It’s a real possibility. The financials of some of the greentech firms aiming for IPOs in 2010, like electric car maker Tesla, bicycle tech developer Fallbrook Technologies, and biocatalyst developer Codexis, aren’t exactly strong.

Tesla has had net losses in each quarter since its inception and has a deficit of $236.4 million. Fallbrook has never been profitable, and reports net losses of more than $11.72 million for the first nine months of 2009. Codexis has seen major net losses for each of the last four years: $18.7 million in the calendar year 2006, $39.0 million in 2007, $45.1 million in 2008, and $15.1 million for the first nine months of 2009 (an accumulated deficit of $154.4 million).

There will be some successful greentech IPOs this year. Silver Spring Networks is expected to file an S-1 in mid-2010 and have a market valuation of $3 billion. Last year the smart grid network maker predicted it would be profitable in the third quarter of 2009 and was expecting revenues of $200 million sometime in 2010.

But if a series of companies, labeled greentech, have particularly poor IPOs then investors could become wary of the whole sector. In the same way that lithium ion battery maker A123Systems inspired greentech companies to hit the public markets behind their successful IPO, a really weak IPO from, say, Tesla, could affect the market for the other firms behind it.

One of the problems is the label itself. As Khosla put it there’s too many companies with poor financials looking at IPOs “under the green banner.” But many of these companies only have a toe in greentech efforts. Biofuels is only one market that Codexis sells into, (contrary to how it’s been portrayed) and the biocatalysts it creates can apply to the pharmaceutical industry, too. Fallbrook is just starting to try to parlay its business of providing continuously variable transmission tech for bicycles to the nascent electric vehicle and small wind turbine market.

Fallbrook, Codexis and Tesla have such wildly different business models and products, that it’s hard to even make comparisons between them. But that’s the problem — investors will make the green connection and weak IPOs could effect the entire spectrum. The real question is if there’s a run of poor IPOs from these firms, how will it affect an IPO from a profitable and revenue-generating company like Silver Spring Networks?

For related articles on GigaOM Pro (subscription required):

Cleantech Was a Market Leader in Q4

In Q3, Uncle Sam Was the Green IT King Maker

Second Quarter 2009 in Review: Green IT

Image courtesy of jtyerse’s photostream Flickr Creative Commons.

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Here at the Department of Energy’s first ARPA-E Summit, which was created around the $400 million in grants that the DOE is giving out to early-stage clean power startups, there’s the “haves” and the “have nots.” The “haves” are the for… Continue reading

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The Obama administration released its proposed budget for the 2011 fiscal year this morning, and within the more than $3.8 trillion plan are several programs that could help shift the playing field for greentech startups and energy companies. To start,… Continue reading

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Clean Power Politics: Green Jobs Still the ‘It Girl’

by Katie Fehrenbacher on January 12, 2010

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It looks like, at least for the gubernatorial set, the bloom didn’t fall off the promise of green jobs as the calender year turned over to 2010. This morning dueling press conferences will be held by the governors of California and New Mexico touting… Continue reading

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Copenhagen Crunch: Amid Chaos, Clinton Proposes $100B Fund

by Katie Fehrenbacher on December 17, 2009

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On the second-to-last day of the international climate negotiations in Copenhagen, there’s gridlock for both the negotiators and for many attendees trying to get into the jam-packed Bella Center. Amid the chaos, U.S. Secretary of State Hillary Clinto… Continue reading

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Green Jobs Data in Catch-up Mode as Feds Pump Cash Into Energy

by Josie Garthwaite on December 17, 2009

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The issue of green jobs has risen once again to the top of the pile in Washington, D.C. in recent days: Most recently, the White House announced a plan on Wednesday to create “tens of thousands of jobs,” the Wall Street Journal reports, by providi… Continue reading

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COPENHAGEN — U.S. Secretary of Commerce Gary Locke told an audience at the Copenhagen climate negotiations on Friday that if history is our guide, the solutions for clean energy will be pioneered by the private sector’s entrepreneurs and innovators… Continue reading

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As global leaders settled in this week to negotiate a climate agreement in Copenhagen — at the U.N. summit that the VP of the Chamber of Commerce’s intellectual property center has called “the IP battle of the year” — the Obama administration… Continue reading

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Automotive X Prize Scores $5.5M DOE Award for Green Car Contest

by Josie Garthwaite on November 2, 2009

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The $10 million in winnings for the Automotive X Prize competition can provide a welcome influx of cash for the DIY garage-based team, startup or even a more established automaker that builds the best 100 MPG car with a minimum 200-mile range, based on… Continue reading

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