Venture Capital firms to invest in clean technology developed at the Mechanical Engineering Department
AUSTIN, TEXAS—January 13, 2009
Article by Lori Hawkins
AUSTIN, Texas—Two venture capital firms that specialize in clean technology have formed two Austin startups by licensing technology from the University of Texas.
Each startup has received a total of $500,000 from the venture firms, 21Ventures of New York and Quercus Trust of Newport Beach, Calif.
Advanced Hydro Inc. is developing advanced water filtration systems, and Graphene Energy Inc. is commercializing advanced energy storage.
21Ventures principal Dileep Agnihotri, who lives in Austin, said the venture firms plan to start additional Austin companies by commercializing University of Texas technology.
"We're in Austin because we think there is some good research going on, and we see some really promising opportunities," said Agnihotri, who is serving as chief executive of both companies.
Agnihotri, who was previously director of marketing in Austin for Jordan Valley Semiconductors Inc., said 21Ventures and Quercus decided to focus on University of Texas technology after investing in solar energy company Entech Inc., based in Fort Worth.
"They realized that there is a lot of potential in Texas, especially at the University of Texas, and they hired me to look over the portfolio at the University's Office of Technology Commercialization," Agnihotri said. "I picked these two technologies to start with."
Quercus, run by former hedge fund manager David Gelbaum, was the third most active clean-tech investor last year, with 16 deals, according to the Cleantech consulting group in San Francisco.
21Ventures, which was founded in 2004 and has $250 million under management, frequently joins with Quercus and invests in clean-tech companies in Israel and the U.S.
Money has poured into clean technology startups in the past few years, but according to a recent survey, that could be changing. Venture investment in the sector plunged 35 percent in the fourth quarter from the prior quarter as a result of the economic slowdown, according to Cleantech Group.
The sector attracted $1.7 billion in the fourth quarter, the smallest amount in six quarters, according to estimates by the Cleantech.
Despite the fourth-quarter decline, clean-tech venture capital investments reached a record $8.4 billion in 2008, up 38 percent from 2007, the survey said. This year the figure is expected to fall to about $7 billion, largely because of the downturn.
Agnihotri said both Advanced Hydro and Graphene Energy, which also has licensed technology from the College of William and Mary at Williamsburg, will spend the next six to nine months running pilots and preparing for commercialization.
The next step, he said, will be to seek venture capital to take the products to market.
"It will be a challenge, because (first-round) investing is really down," Agnihotri said. "But if we show good potential and demonstrate the value through our pilots, I believe we can make it happen."