Clean Tech, Mergers and Acquisitions etc

Its been a while since I blogged, what with travel and a hectic schedule, but its time to get back to writing. Over the summer, Ed Gunther of Gunther Portfolio and I submitted an entry for the California Clean Tech Open. Our entry was in the space of waste heat conversion to energy. It was a lot of work and we got a provisional patent out of it, but we did not quite make it to the finalist list. Our idea was great, we think :-), and I am sure one of these days we will see such products in the market. The competition was stiff and the winners for the CCTO will be announced at the end of October and I think we will see some excellent new companies come from them. This year Forbes covered CCTO and some of the finalists got some excellent visibility.

Meanwhile, Silicon Valley is on a roll. The pace has picked up not only in the Internet space and Web 2.0, but in alternative energy too. Nanosolar raised $100M in June 2007 and is setting up manufacturing in San Jose and in Germany. Not to be outdone, another thin film CIGS company SoloPower of Milpitas raised $30M in July. Its interesting how the Internet and alternative energy fields intersect. The Google founders are investors in Nanosolar. But, that's always been the story of the Valley. The semiconductor entrepreneurs of the previous generation from Fairchild, Intel, National Semi and others became VCs at Kleiner, Sequoia and other firms and they invested in a host of new technologies and companies including Google and Yahoo, which have in turn grown to become giants of their own. If anything, the pace has accelerated in recent years. The Valley is as fertile in innovation as it was in the days of the fruit orchards of the early 20th century. Meanwhile, Fairchild has turned 50 and the Valley is moving even faster with its innovation. Sometimes the more things change, the more they remain the same, however. One could look at the new alternative energy companies, especially in solar energy as related to semiconductor technology.

Mergers and acquisitions have always been an integral part of the Valley scene. On September 20th, the MIT Club Semiconductor Entrepreneur Series hosted an event on " How to Negotiate an Acquisition Term Sheet" at Cooley Godward in Palo Alto. This was an interesting event where two Cooley attorneys, Jenneifer Fonner DiNucci and Jane Ross negotiated a hypothetical acquisition term sheet. They covered the highlights of the negotiating strategy and the structure of the term sheet. There is wide variation in these deals and the devil is in the details. Interestingly, they pointed out that the bigger billion dollar deals tend to be simpler in structure than the smaller million dollar deals. The whole discussion and audience participation was very illuminating and covered the acquirer, acquiree, VC, investment banker, attorney and employee perspectives.

Talking of billion dollar deals, sometimes they don't work out the way everyone wants. Today Ebay announced a writedown of the Skype acquisition. The co-founder and CEO, Zennstrom apparently leaves with an accelerated payment. The earn-out agreement on that term sheet must have been interesting :-) Meanwhile, Zennstrom is probably concentrating on his next venture Joost and a spectacular exit for it as well. Its interesting how quickly Scandinavia has adapted to the Silicon Valley model :-)

Madan