It’s scale up time for the Quercus Trust.
The somewhat secretive venture firmis not currently placing new investments, said founder David Gelbaum inan exclusive and somewhat rare interview. Instead, the firm willconcentrate on putting more money in the existing companies already inthe portfolio to build them up.
Considering the scope of the trust, that’s still a mammoth job. Thefirm has around 40 to 45 companies in the portfolio, he estimated, andmost are early stage companies. The company has during various times inthe past held stock in public companies and it has walked away from atleast one small, privately held company. (Disclosure: we counted 48earlier from SEC reports and press releases. Even with 40 companies,Quercus would have one of the broadest portfolios of any green tech VCfirm.)
Some portfolio companies have also endured rocky times. Solar cell make DayStar Technologies, for instance, has swapped CEOs a number of times in the past two years and struggled to generate sales. A downturn in the Quercus portfolio forced Gelbaum in late 2009 to curb charitable donations.
To the end of scaling up the companies in the portfolio, Gelbaum today announced earlier today that he will step in as the CEO of Entech Solar,which makes a skylight device that combines solar thermal and solarphotovoltaic technologies. The company, formed out of merger of twoother companies, has designed its product but is not selling it yet.After it unveiled its device and new strategy in January 2009, Entechhad to lay off employees and retrench.
"One of the beauties of Entech is that it doesn’t use a lot ofcapital," he said. Entech harvests the solar cells and other componentsto produce its somewhat unusual module. "It is more of a workingcapital business."
Solar will likely continue to occupy a central part in the company’sportfolio. In fact, Quercus initially got into greentech by investingin solar. "In 2006, I started with publicly traded companies. No oneknew who I was," he said. Besides Entech, the firm also has a state ineSolar (a solar thermal company that has landed two major deals inIndia and China) Cool Earth Solar (concentrators for solar panels) andothers.
Right now, Quercus only has one biofuel investment-BlueFire Ethanol, which recently landed $81 million in DOE stimulus fundsto help it build a 19 million gallon a year plant. It used to have aposition in LiveFuels, the algae producer. The firm has an investmentin GridPoint Energy, the smart grid specialist, but the one thingGelbaum mentioned about the company was that it recently picked up asolar installer.
"I’m very bullish on solar. The costs are coming down and a lot ofmoney is going into research," he said. "In 2006 I decided it was timefor me to do something new. Solar made the most sense.
"The (green tech) industry will be competitive with fossil fuels one of these days on its own," he added.
The firm also has a novel waste heat company-the company’s equipmentharnesses waste heat, boils water, and uses the resulting steam in asteam turbine to produce electric power. And, to his credit, eSolar andBlueFire have experienced an upswing recently. BioPetroClean, anotherQuercus company, has also received investment funds from Dow Chemical.
Gelbaum denied that he was overextended.With 40 plus investments, the firm has more investments that most othergreentech firms. He works with David Anthony of 21Ventures to find andmanage the companies. Occasionally, the two will incubate companies from a paper in a scientific journal. "It is a matter of paying attention. The main thing is to get a CEO," he said.
And why has Gelbaum-who made millions from stock trading algorithmsthat he began to devise and license as a teenager–been so silent?"I’ve tried to keep a low profile. I didn’t see any reason not to," hesaid. "But I don’t consider it a low profile anymore."