The real reason for the greentech IPO missteps

While the greentech industry had been hoping for an IPO revival this month, the sector has actually seemed to hit a higher level on the FUBAR charts. Three companies withdrew their IPO plans in the 11th hour (BrightSource, Luca Technologies and Enerkem), while the one made that it out priced at the low end of its projections (Enphase Energy).

But does this necessarily mean that greentech startups eying the public markets in 2012, shouldn’t waste their time? Well, take a look under the hood of most of these companies, and the problem isn’t really about being green or selling into the energy sector, it’s the lack of profits and even revenues in some cases.

As the co-founder of Lux Capital, Peter H├ębert, tweeted Friday morning (@peterjhebert):

“Lot of hand-wringing about #cleantech IPOs. No morals in mkts. Should not expect willing buyers of unsustainable, profitless businesses.

So true. I was wondering just how few revenues and profits these firms have been taking in, so I decided to table ’em up. The ugly truth:

Company Type of company Revenue 2011 Net Income Investors
BrightSource Solar thermal $159.10M $110.96M loss Alstom Power, Draper Fisher Jurvetson, VantagePoint, Morgan Stanley
Enerkem Waste to fuel No revenue $26.18M loss Rho Ventures, Braemer Energy, Waste Management
Luca Technologies Gas farming $1.06M $18.02M loss Kleiner Perkins, One Equity Partners, Oxford Bioscience Partners, BASF Venture Capital
Enphase Energy (did IPO) Solar micro inverter $149.52M $32.30M loss ThirdPoint, RockPort Capital, Madrone Partners, Kleiner Perkins, Applied Ventures

The reality is that Enerkem and Luca Technologies had really no business going public with their current financials — the moves seemed like attempts to raise money to build their operations, and the markets just didn’t want to do that. As soon as BrightSource pulled their IPO plans, likely Luca and Enerkem just saw the writing on the wall.

BrightSource on the other hand, has a growing, though clearly, for the time being, a money-losing business. When (and if) the company builds out its first solar plant, Ivanpah on time and budget, then the firm will start moving into a more financially lucrative position. BrightSource was likely also hampered by the fact that the solar panel markets are really struggling, even though BrightSource builds solar thermal plants and doesn’t make solar cells or panels.

Enphase Energy was the one company that actually went through with their IPO and it’s not surprising that they have the most sound 2011 year financials. Enphase Energy is growing pretty dramatically, but that firm, too, has a lot of new competition in the marketplace, so has a big year ahead of them.

Image courtesy of angusf.