When the price of natural gas has halved in the seven years your company has been operating and your business is to convert coal into methane then you must have done something spectacularly well to justify a $420m series D round by your corporate venturing backers.
For US-based coal conversion company GreatPoint Energy, the D round funding by China-based industrial conglomerate Wanxiang’s corporate venturing unit came as part of a $1.25bn partnership to help it develop its technology in Asia.
GreatPoint’s D round was the largest investment by a Chinese corporation into a US venture-backed company, according to news provider Dow Jones VentureWire.
The large size and scale reflects China’s need to continue using its coal deposits for energy but with less pollution.
GreatPoint’s BlueGas technology pilots in the US, protected by more than 60 patents, have shown its catalysts can require less energy to convert the coal to methane while capturing the carbon for use in recovering oil.
Wanxiang mainly makes automotive parts and its development has gone hand-in-hand with China’s industrialisation as the conglomerate has grown from $500 in seed capital in 1969 to $12bn in estimated revenues in 2010.
Wanxiang produces about a third of the world’s auto parts and gains about 20% of its revenue from energy-related business, according to VentureWire.
The investment followed an earlier agreement with GreatPoint to trial its technology at a coal-firedpower plant operated by China-based Datang Huanyin Electric Power.
Most of the $100m to $200m financing for the plant was to have come from Datang after the agreement was signed in late 2008 with additional funds coming from Beijing Gas Group, a gas distributor, and New Horizon Capital, a private equity fund company in Hong Kong, but the contract was cancelled the following year.
But whereas the fall in gas price from $5.73 per 1,000 cubic feet to $2.46 over seven years, according to the US Energy Information Administration, has had some impact on US clean-tech investing, the stategic needs of corporations in China has apparently outweighed this factor judging by Wanxiang’s investment.
GreatPoint, however, has seen considerable support from US companies and venture capital firms.The company raised $100m in its series C round in October 2007, which was co-led by Sustainable Development Investments (SDI), a unit of Citi Alternative Investments, part of US bank Citigroup, as well as Dow Chemical.
Jim Plonka, then vice-president of Dow Venture Capital, the chemical company’s corporate venturing unit now led by Monty Bayer, who picked up the Global Corporate Venturing award on behalf of its portfolio company, at the time said: "As Dow advances its strategic growth agenda, it becomes critical to access a diversified,competitive supply of feed-stocks and energy, including innovative alternatives with a more favorable environmental profile."
GreatPoint’s other strategic investors include US-based power company AES and US-based energy company Suncor Energy. Financial investors include venture capital firmsKleiner Perkins Caufield & Byers, Khosla Ventures, Advanced Technology Ventures and Draper Fisher Jurvetson, with Tokyo-listed Japan Asia Investment Company JAIC America subsidiary also an investor, according to Dow Jones.
Prior to its C round, GreatPoint raised $30m in 2006-7 and $6.7m in the A round in 2005, the year the company was founded.
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GreatPoint Energy – $420m round led by a China firm as part ofa larger partnership indicating transfer of intellectual property from US to China.