Summary:

An outlier appeared this week that seemed more consistent with 2006, rather than 2012. A group of high-profile venture capitalists put a large round into a potentially capital intensive next-gen energy technology, showing there’s still room for some of these big energy ideas to be funded.

LightSail

This week a young startup with a potentially disruptive energy technology was able to do something pretty rare these days: it managed to raise a large round from some of Silicon Valley’s leading venture capitalists. And no it wasn’t a digital-based energy technology (or Clean Web as it’s being called these days) — the $37 million in funds were for LightSail Energy’s compressed air energy storage technology, which could eventually be pretty capital intensive to scale up and commercialize.

About five years ago, cleantech startups with ambitious ideas were commonly able to raise such rounds to build next-gen solar panels, electric cars and battery technologies. But over the past 18 months, in the post-Solyndra era, the mood of many venture capitalists toward cleantech has decidedly soured. Not many investors have yet to make money and most new cleantech startups are finding it particularly difficult to raise large rounds for anything that requires much scale.

Which is what makes LightSail Energy’s ability to secure funding from Peter Thiel — who was once quoted as saying cleantech has been “a disaster” — along with Khosla Ventures and Bill Gates a total outlier. “There have been a lot of broken promises that didn’t work out the way people thought they would,” says LightSail Energy’s CEO and co-founder Steve Crane in an interview explaining the cleantech startup and investing bubble of previous years. Crane says Thiel’s widely quoted comment about a cleantech disaster was really about how investors made bad choices when picking investments, and that the right solutions hadn’t yet emerged.

Crane is hoping LightSail will be one of those right solutions — and a winning bet — for his investors. Compressed air storage is a decades-old technology which takes excess energy from a power plant or renewable energy and uses it to run air compressors, which pump air into tanks where it’s stored under pressure. When the air is released, it powers a turbine, creating electricity. LightSail is making a very efficient version of compressed air energy storage that can be paired with solar and wind farms.

But Crane is still cautious of making too many claims too early about the technology, given it isn’t yet a commercial product. In 2014, LightSail plans to finally have its first commercial air energy storage product available for customers like solar and wind farm developers. The air tanks can store solar and wind power when it’s in excess, and bank it for use at a later time. In the meantime, Crane is holding back on key details, like how much the technology will cost (a key factor that will determine its success).

Throughout 2013, LightSail Energy will work on tweaking its second generation prototype, which is currently a large — 6-foot, by 15-foot — machine that is just bigger than a shipping container. The company will work at making the device as efficient as possible, and also able to last the two decades required for installing it on the power grid. The device will eventually have a 70 percent trip efficiency, which is a lot higher than the standard compressed air storage technologies of yesteryear.

LightSail’s third generation prototype will be close to its commercial product and will hopefully fit in a shipping container, says Crane. That will make it cheaper to ship. The three factors that LightSail will focus on working out in 2013 will be “cost, durability, and efficiency,” says Crane, adding “efficiency is the hardest one of all. There are dozens of places where it can lose efficiency.”

LightSail’s recent round was a D round, and Bill Gates and Khosla Ventures were already backers of the tech before this round. Investors are of course more willing to provide follow-up financing. Capital intensive startups are finding it particularly hard to raise early stage and A rounds.

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