General Electric and five venture capital companies today said they will invest $63 million in 10 green-tech start-ups working in home energy, bringing them both money and credibility.
GE will also give five $100,000 grants to less-developed companies creating products around household energy efficiency and solar power. The three areas of investment are solar, communications and software, and energy efficiency, said Ecomagination Challenge director Tore Land.
The funding is part of GE's $200 million Ecomagination Challenge program launched last year to solicit ideas to improve the electric grid. GE and its venture capital partners invested in smart-grid and renewable energy companies in the first phase and then launched a second home-energy challenge earlier this year.
The 10 companies to receive money had received financial backing from other sources and, in most cases, are already selling products. But having GE as an investor brings more recognition to these small companies and gives them access to GE's engineering and marketing know-how.
"Having a company with the stature and the clout in the marketplace like GE which says 'Yes, we believe in this and look at the profits and revenues we are generating' is the kind of impetus this industry needs," David Prend from venture capital company Rockport Capital said in a Webcast today.
The 10 companies and their focus:
Ember, low-power chips for smart meters and building sensors
Hara, carbon and energy management software
GMZ Energy, thermoelectric chips that convert heat from solar panels and other sources to electricity
Nuventix, LED cooling systems
On-Ramp Wireless, sensor networking
Project Frog, green buildings
SunRun, residential solar financing
Viridity Energy, microgrids and smart-grids
VPhase, home voltage optimization
WiTricity, wireless charging
GE intends to create a $20 million fund for pilot-testing products from Ecomagination Challenge winners, establish a challenge specific to China, and a $5 million seed fund for Europe. GE is also creating an internal team to work with its start-up partners on ways to bring their products to market, said chief marketing officer Beth Comstock.
"It's not just the money. It's really about the collective brainpower and the sharing of operational expertise," Comstock said. "Start-ups want to see their ideas live, they want the ability to scale, and bring that to market. Those are resources that GE has that a VC doesn't necessarily have."
In one effort to get start-up products to market, GE partnered with Best Buy. The retailer will sell VPhase's home energy system, which can cut electricity use by 10 percent, and an air conditioning control system from grant awardee Suntulit, which can cut energy use by 30 percent. Best Buy will also start selling GE's Nucleus home energy management system in early 2012 for $149 and its LED bulbs later this year.
Since launching the Ecochallenge program last July, GE has reviewed 5,000 business plans and invested $168 million in 22 companies or partnerships. Land said that GE was impressed with the quality of the submissions. In some cases, GE and its venture capital partners didn't invest or partner, but a number of direct connections between challenge participants happened.
"There is a global passion for eco-innovation, it's almost like people were rooting for sports teams," Comstock said. "It became like Match.com for innovators to find each other."