SF Clean Tech Fund Is An Outlier: It Makes Money

By Thomas Lee
San Francisco Chronicle

WWR Article Summary (tl;dr) Energy projects like solar, wind, and biofuels have traditionally required huge amounts of capital, which makes the prospect of a return, at least in the short term, a dim possibility. However the “Ecosystm Integrity Fund” is bucking the trend.

San Francisco Chronicle

The Ecosystem Integrity Fund, a relatively new venture capital firm that focuses on environmental sustainability, is enjoying a solid debut, having sold two of its startups to corporations over the past three years.

But given the disastrous performance of such clean tech, or green, funds over the years, I wonder if the San Francisco firm can sustain its own success.

Begun in 2011, the $20 million fund has already paid out more than $40 million in cash to its investors, thanks to two big exits: SolarCity’s $158 million acquisition of Zep Solar, which makes mounts for solar panels, in 2013 and last week’s announcement that drink and snacks giant PepsiCo will purchase KeVita, a probiotic drink startup; Fortune reported that the purchase price was around $200 million.

“Large corporations frequently invest in companies that are at the forefront of trend opportunities,” said Devin Whatley, founder of the Ecosystem Integrity Fund. “PepsiCo is not very good” at building brands from scratch in new categories.

Doubling investors’ money in just five years is impressive enough. But doing so in a space that has sucked the life — and cash — out of many a clean tech fund makes Ecosystem Integrity Fund a real outlier.

“They are off to a great start,” said Marc Weiser, managing director of RPM Ventures in Ann Arbor, Mich. “Under any measure, that’s a really good fund.”

They key is whether the Ecoystem Integrity Fund can maintain its winning streak, Weiser said. The company has already raised $60 million for a second fund and is working on a third.

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