GE: Doing cleantech the right way
GE has built it's cleantech empire through vision, judicious acquisition, timing, and solid investment.
I have long had a respect for GE (NYSE:GE), and how it runs its business. In cleantech, I am very, very jealous. They have made themselves into the company to beat. Whether by plan, luck, or simply applying sound business discipline, GE has made itself into a top 3 global cleantech player no matter happens. And they did it for a fraction of the price, and a lot less risk than anyone in Silicon Valley or the energy sector. Venture capitalists beware, in cleantech, the behemoths have beat you to the punch, have done it cheaper, faster, and with more grit than you realize. (Read an interview with GE's vice president of Ecomagination.)
5 step Cleantech Program by GE
Wind - In 2002, GE bought Enron Wind out of Enron's bankruptcy for about $300 mm, making GE one of the top 5 wind players overnight (it's now well in excess of a billion in revenue). It was their first cleantech steal, right before the wind industry got amazingly tight (and huge).
Power - In 2003, GE acquired one of the leading gas engine manufacturers in Jenbacher, making GE an overnight leader in small, clean power systems, and powering their way into everything from distributed generation to landfill gas markets.
Solar - In 2004, just before the solar boom, GE acquired Astropower, one of the top 5 solar energy companies in the US, for less than $20 million out of bankrupcty, after the company was delisted following accounting irregularities. You cannot even build a single solar manufacturing line for $20 mm. Only the subsequent silicon supply shortages, and a lack of the needed investment in the business and next generation technology kept GE from making a homerun out of it. But despite that, there will never be another steal in solar quite like this.
Water - In 2005, GE acquired one of the largest water technology businesses in the US, Ionics, to complement its previous acqusitions in the water sector. Paying a full price of $1.1 Billion, it virtually guaranteed GE a top 5 position in the reverse osmosis, desalination, and water purification markets going forwrad, right after Ionics was shored up through a merger with Ecolochem.
Ecomagination Brand - Then on the back of these deals, in 2005 GE launched its Ecomagination initiative, and anchored the entire company's image around its new cleantech empire.
That, my friends, is the way you make money in cleantech venture capital. I would venture to guess that GE has made 10x its money, no matter how you spin it. Or put another way, an IPO of the GE cleantech business would be the hottest thing in years.
Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of Cleantech.org, and a blogger for CNET's Cleantech blog.