Smart Hydro Power raises €2.7 Million Series A from eCapital
Smart Hydro Power successfully closed their Series A financing round raising €2.7M from the German Cleantech VC eCapital which values the startup at €8.4M premoney. The seed investor High-Tech Gründerfonds converted their loan in this round. As Smart Hydro Power also won the Ecosummit Jury Award 2012 convincing our 53 judges, this milestone is a welcome opportunity to interview the CEO Karl Kolmsee and his investors about the deal and the prospects of this unique young company. Moreover, this deal proves that we continue to bring the best smart green startups onto our Ecosummit stage. To celebrate, we are happy to publish Karl’s fantastic ECO12 pitch on Ecosummit TV just in time for this story.
Smart Hydro Power (SHP) develops and manufactures kinetic hydro power plants that use the movement of rivers to produce clean energy. The hydro power plants are targeted at offgrid communities that up to now had to rely on costly and dirty diesel generators. SHP’s product development is guided by target costing which follows the goal of developing a competitive product for existing markets that is less expensive than the competition and doesn’t need any subsidies to sell. Michael Lübbehusen, one of 3 Managing Partners at eCapital, explains the USP of their new portfolio company: “What makes SHP special is their design-to-cost approach. They didn’t create a problem just because they developed a great solution, but rather accommodated a given need to replace diesel generators in remote areas. That they designed a solution which is not only green but also cost saving and easy to install is a great add-on.”
Smart Hydro Power is eCapital’s second cleantech deal after Geo-En in a short time. This is a positive sign and proves that German entrepreneurs are able to create promising smart green startups. As Michael elaborates: “The interest in renewables and CO2 emissions in Germany is very strong, especially now that our government announced the transition from nuclear power to green energy. Cleantech receives an attention like never before within the whole population. But eCapital has been investing in Cleantech companies for years, for example in Novaled in 2005 or Heliatek in 2009. Thus, we were able to establish longterm partnerships and the entrepreneurs trust us due to our own entrepreneurial experience in building great companies.”
Andreas Quauke is Investment Manager at High-Tech Gründerfonds (HTGF), Germany’s leading seed investor, and accompanies Smart Hydro Power since their seed round in which HTGF invested €500K for 15% as a convertible loan. The convertible loan prevents dilution in the next financing round when it is converted to shares. As it also earns interest, High-Tech Gründerfonds now owns 17% of SHP which values their stake at €1.4M premoney. Follow-on investments into their portfolio companies are the key success factor for HTGF and, as you can see, they are necessary to increase the portfolio value. Andreas confirmed that Smart Hydro Power had several term sheets on the table but eCapital, that now owns 32% of SHP, won the race as it was the best match.
Karl Kolmsee wants to use the new working capital mainly for developing a second, more compact product targeted at more shallow water profiles to increase the number of target rivers. Smart Hydro Power plans to work with leading research institutes and universities as external product development partners to advance product innovation to the next level. SHP is also a cleantech partner of Autodesk.
Next to developing a new product to serve more markets, the big challenge is sales. Michael Lübbehusen of eCapital describes the sales challenge like this: “First, SHP has to install their small hydro power plants in fast growing developing countries to demonstrate their potential. After proving to the people that these systems are ecologically as well as economically friendly, SHP will be able to contract strong local sales people who will distribute, maintain and install their micro plants that can be assembled locally.” Andreas Quauke of HTGF goes even further: “The real goal now is to make a couple of big deals, for example 100 power plants bought by a big investor focused on renewable infrastructure projects in developing countries.” Of course, the big deals are rather implemented by large contractors such as Siemens or ABB to which Smart Hydro Power will be the key supplier.
If Karl and his team manage to close a few of these big deals, the next Series B financing round may certainly attract some of the very powerful late stage Cleantech VCs such as zouk, Kleiner Perkins or the others on our VC list to accelerate Smart Hydro Power into the €100M startup league. I personally believe that Karl will be one of Germany’s smart green startup heroes and I am sure that you agree once you have watched his ECO12 talk on Ecosummit TV.
Tags: Andreas Quauke, Autodesk, Berlin, Cleantech, eCapital, ECO12, Ecosummit 2012, Ecosummit TV, Feldafing, Heliatek, High-Tech Gründerfonds, HTGF, Karl Kolmsee, Kleiner Perkins, KPCB, Michael Luebbehusen, Novaled, Offgrid, Series A, Smart Green Startup, Smart Hydro Power, startup, zouk