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Flash analysis: the Fisker debacle and its implications on investing, innovation, and government incentives

Katie Fehrenbacher — Fri, 03 May 2013 06:55:07 +0000

Electric car startup Fisker Automotive, along with its plug-in sports car, is turning out to be one of the worst venture capital bets of all time. We asked GigaOM readers a variety of questions about what they think will happen to Fisker and what they think will be the broader implications of and lessons learned from Fisker’s high-profile crash and burn. Here are the results.

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Fisker lawsuits piling up, another from its web designer over alleged unpaid bills

Katie Fehrenbacher — Sat, 13 Apr 2013 20:28:35 +0000

Following a lawsuit over not paying rent for the month of April, electric startup Fisker Automotive was hit with another lawsuit on Friday. Filed in Orange County Superior Court, Fisker’s web site and mobile designer Ignited is suing Fisker over an alleged $535K in unpaid bills (embedded below).

Ignited says it provided Fisker with creative services, advertising, web design, and creative and media buying services. Along with the lawsuit from Fisker’s landlord, the company was also served a class action lawsuit for laying off 75 percent of its workforce, and allegedly not giving the former employees 60 days notice (which would violate the WARN Act). So that’s three lawsuits filed against Fisker this month, and I have a hunch there’ll be more coming.

Fisker appears to be close to bankruptcy and according to Reuters last week, the company hired a firm to look into bankruptcy, and could file at any time. Fisker’s founders have also been asked to attend a hearing on April 24 in Washington D.C., organized by House Republicans. Fisker drew down on close to $200 million in a government loan from the Advanced Technology Vehicle Manufacturing Program.

Fisker raised at least $1.2 billion in funds over the company’s five and half year lifetime. Fisker was backed by venture firms Kleiner Perkins (Ray Lane was a board member) and NEA, and worked with now-defunct broker Advanced Equities.

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Fisker’s landlord says pay rent or get out

Katie Fehrenbacher — Fri, 12 Apr 2013 21:34:36 +0000

The landlord of electric car startup Fisker Automotive has filed a lawsuit this week that alleges that Fisker has to pay its April rent on its property in Anaheim, California or leave the premises. In a lawsuit filed in the Superior Court in Orange County, California (embedded below) on April 10, landlord WWG Canyon Corporate Owner says that Fisker owes it $174K for rent for the month of April.

Row of Fisker Karmas

The landlord says Fisker has 5 days to pay or they’ll be evicted. Fisker entered into the lease on December 10, 2010. According to Reuters Fisker could declare bankruptcy as soon as this week. If Fisker isn’t paying its bills, it certainly looks to be getting closer to filing BK. The company laid off 75 percent of its staff last week and was then served with a class action lawsuit for allegedly failing to give those employees 60 days (the WARN Act).

Fisker’s founders have also been asked to attend a hearing on April 24 in Washington D.C., organized by House Republicans. Fisker drew down on close to $200 million in a government loan from the Advanced Technology Vehicle Manufacturing Program. Fisker also raised $1.2 billion in funds over the company’s five and half year lifetime. Fisker was backed by venture firms Kleiner Perkins (Ray Lane was a board member) and NEA, and worked with now-defunct broker Advanced Equities.

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Sources: Fisker to lay off many of its employees today

Katie Fehrenbacher — Fri, 05 Apr 2013 15:00:05 +0000

According to several sources, electric car maker Fisker Automotive is planning to lay off many of its employees today. Sources tell me that there is a company meeting at 8AM today where the company will announce this to the employees.

Updated at 8:30AM: I’ve heard that 160 Fisker employees were let go this morning, and 53 employees will stay on to manage further negotiations with the Department of Energy and a potential sale of assets.

I’ve also heard that law firm Outten & Golden has been looking into initiating a class action law suit to represent Fisker’s employees should Fisker fall into bankruptcy. The firm is looking into whether Fisker (like Solyndra) will or already has violated the WARN act.

The news follows reports that Fisker has hired a law firm to advise it on bankruptcy options. It owes a loan repayment to the Department of Energy this month, and has been cutting costs and furloughed its employees last month. The company hasn’t made a car since the summer of 2012.

Earlier this year Fisker was trying to make deals with Chinese auto makers for an acquisition or a partnership, but those seem to have fallen through. Fisker also announced last month that its celeb designer founder Henrik Fisker had resigned over internal disagreements.

Fisker was founded in 2007 and has raised over a billion dollars from venture capitalists like Kleiner Perkins, NEA and others, as well as wealthy individuals organized by now defunct broke Advanced Equities. Fisker also received part of a loan from the Department of Energy.

The company built a high-end electric hybrid sports car called the Karma, and shipped thousands of these to customers. But the company faced problems with recalls, software glitches, a battery supplier that went bankrupt and lost hundreds of Karmas in superstorm Sandy.

For some more background, read my previous post: Tesla, Fisker, and what could have been: A tale of two electric car startups

We’ll update this story today as we hear more.

Updated at 8:25 AM, April 5, with the number of employees I heard were let go.

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MuleSoft rakes in more moolah to connect your applications to the world

Barb Darrow — Wed, 03 Apr 2013 11:05:48 +0000

MuleSoft wants to be the hub that connects your legacy on-premises applications with their mobile and web-based counterparts and now it has $37 million more in funding to achieve that mission. The Series E round, led by new investor NEA, brings total venture investment in the San Francisco company to $81 million.

MuleSoft CEO Greg Schott

MuleSoft also announced its new “Anypoint Platform” which it paints as the hub for connecting elderly on-premises applications to the shiny, newer mobile and web-based apps that companies increasingly turn to.

The company supports all the major publicly available application programming interfaces (APIs) — no mean feat since by its count there are about 13,000 of them now, up from about 100 in 2006. Back then, only new-fangled companies like Yahoo Amazon, and eBay offered APIs as a standard way to interact with their applications.

“The new enterprise feels different. You still have legacy stuff that needs to be connected to your newer SaaS and mobile platforms. Anypoint provides the blueprint to connect all that up,” said Ross Mason, MuleSoft founder and CTO said in an interview.

MuleSoft CEO Greg Schott said the business of connecting all these enterprise applications represents a $500 billion opportunity, but one for which it must compete with a bunch of legacy vendors including Tibco and IBM (with its wild world of WebSphere). In some areas it also competes with newer companies like Apigee, but mostly MuleSoft’s SaaS solution gives companies an option other than turning to third-party systems integrators or hand coding connections between applications.

Salesforce.com is also a new investor in this round joining previous funders Hummer Winblad, Morganthaler Ventures, Lightspeed Venture Partners, SAP Ventures and Bay Partners.

The latest cash infusion will help the company build up its sales and marketing presence and to keep building up its product. “We’re investing extremely heavily, this is all subscription based revenue which means this is a cash-consuming businesses,” Schott said.

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Solar makers turn a laser-like focus on boosting the efficiency of solar cells

Katie Fehrenbacher — Mon, 04 Mar 2013 19:36:11 +0000

In 2013, solar makers are preoccupied with boosting the efficiency of solar cells, or basically using various techniques to increase the amount of sunlight that each solar cell can convert into electricity. That’s because it’s one of the most important ways they have right now to reduce costs in a difficult year for solar manufacturers. The supply of solar cells in the market over the past year is far more than demand and some companies are selling solar cells at a loss.

It’s a particularly important trend for solar maker startups that need a premium product to sell. For example, on Monday morning, venture-backed solar startup Alta Devices announced that it’s reached 30.8 percent efficiency for solar cells that it’s marketing to mobile gadget makers. For comparison’s sake traditional silicon solar cells are closer to 20 percent efficient.

Alta Devices says it has been working with mobile device maker customers that want to extend the battery life of gadgets using embedded Alta solar cells. The six-year-old company — which has raised $120 million from investors like Kleiner Perkins, NEA and Dow Chemical — has been planning on making a fast-charging solar iPad cover by the end of the year that could end the need to plug an iPad into the wall or laptop to charge.

Alta Devices says the 30.8 percent is a world record for its dual junction solar cell made from the materials gallium-arsenide, and previously the company was saying its cells were 28 percent efficient. Check out this article for more details on Alta Device’s solar cell technology and a tour of its pilot factory. Alta says it has been shooting for an eventual efficiency of 38 percent for its cells.

Remember this type of efficiency demonstrates what a company might be able to achieve. But whether a company will ever do so will depend on factors such as how much does it scale up its manufacturing, how much money is it able to raise and how efficiently it is operating factory equipment.

Alta’s solar cells are more expensive than traditional silicon cells, but the company is hoping that niche markets like gadget makers will be willing to pay a premium for the next-gen cells. Alta is also developing solar cells for military applications, which can enable troops and their devices to charge up off-the-grid in combat less frequently.

Startups aren’t the only ones that are focused heavily on solar cell efficiency. First Solar last week announced a world record of 18.7 percent for cells made from the material cadmium-telluride. That’s up from the 17.3 percent cell it touted in July 2011.

SunPower has long touted highly efficient solar cells. And suppliers like DuPont sell materials that big solar companies can use to boost the efficiency of their cells.

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Lux Capital closes $245M third fund, remains committed to energy tech

Katie Fehrenbacher — Wed, 13 Feb 2013 12:30:55 +0000

Not all venture firms are joining the cleantech exodus. Lux Capital, which invests in a lot of science-based, hardware and infrastructure innovations, has closed its third fund of $245 million, and Lux Capital partner Peter Hebert told me that the firm will continue its current model of investing about a third of its funds into energy tech, a third in information technology and a third in health and biotechnology.

A few of Lux’s portfolio companies appear to be doing pretty well. Kurion, a startup developing nuclear waste cleanup tech, scored a breakthrough deal to help clean waste water for Japan’s Fukushima nuclear meltdown. About a year ago I called them “the most successful greentech startup you haven’t heard of.” Portfolio company Shapeways has become synonymous with the emerging industry of 3D printing, and smart grid startup Gridco just launched to build a next-gen power grid using solid state transformers. Portfolio firms that have been acquired include skin company Magen Biosciences, LED tech company Crystal IS, and chip companies SiBeam and Silicon Clock.

“There’s definitely been negative sentiment towards cleantech in the market,” said Hebert, but it really “depends on the individual Limited Partners” (the groups that put money into venture firms). Our LPs still see substantial innovation ahead around energy and resources, said Hebert. Going forward in 2013 “we remain disciplined and selective,” said Hebert.

While Lux says it remains committed to energy tech investing, other firms have been unable to raise new cleantech funds, and some have dialed back or transformed their energy and cleantech focused divisions to make them more capital efficient. VantagePoint Capital Partners shut down its efforts to raise a $1.25 billion cleantech fund recently, and firms like Mohr Davidow and Draper Fisher Jurvetson have reduced their commitments and turned to backing IT-based cleantech, or cleanweb companies only. In 2012, venture capital firms put a third less money into cleantech companies compared to 2011.

Still some investors like Lux Capital still see the potential of energy and resources technology innovation. Canadian firm Chrysalix says its energy focused portfolio is doing well. NEA says its still committed to energy investing, though its scaled back a bit. Khosla Ventures still continues to make aggressive and many bets across sustainability from energy to agriculture to smart grid to biofuels.

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VantagePoint curbs cleantech fund raising due to lack of interest

Katie Fehrenbacher — Tue, 05 Feb 2013 17:27:03 +0000

Venture capital firm VantagePoint Capital Partners, which made one of the most aggressive bets on backing cleantech startups, has stopped raising a planned $1.25 billion fund to put into cleantech companies due to lack of support from limited partners (the pensions and big investors that put money into venture capital funds), according to a report from Dow Jones VentureWire. VantagePoint started raising that fund (VantagePoint CleanTech Partners III) in late 2010.

It’s no surprise that LPs are growing cold on the sector. I discussed this with a panel of investors late last year at the VERGE conference. Salzman tells VentureWire that the reality from the LP community was: “show us the money.” Other firms that have pulled back (slightly or a lot) or changed their strategy to focus on green IT include Mohr Davidow, NEA, Draper Fisher Jurvetson, and Kleiner Perkins.

VantagePoint had a few wins, but it also has had many losses. On one hand VantagePoint backed Tesla and Solazyme, which both went public. But the company also backed firms like MiaSole, Serious Energy, Tendril, and Better Place, which have struggled. Bright Source was planning on going public but pulled the IPO in the 11th hour.

Salzman embodied the aggressive all-in approach of cleantech investing. He told me in an interview in late 2011 that “when it comes to greentech investing, it’s basically all or nothing.” And instead of becoming more cautious when the market cooled following the 2008 recession, Salzman and VantagePoint seemed to double down.

VentureWire asked Salzman whether focusing VantagePoint on cleantech was a mistake, and Mr. Salzman told them: “I wouldn’t admit it if it was.”

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Take that, Geico caveman: MetroMile remakes car insurance with data

Katie Fehrenbacher — Wed, 05 Dec 2012 14:10:19 +0000

Ever wonder why insurance companies have the most ridiculous ads (Geico caveman, Aflac duck, Mayhem Allstate guy)? It’s because they’re all basically offering the exact same service, so they have to out-guffaw each other to claw off each others’ customers. But a new startup called MetroMile, is launching on Wednesday in Oregon with a new type of insurance that uses driving data to charge customers per-mile rates.

The company and idea were created by David Friedberg — also the founder and CEO of The Climate Corporation — and Steve Pretre, who will lead the startup as its CEO. Friedberg brought in Climate Corp’s investors (as well as Climate Corp itself) to back MetroMile, and the company has already raised $4 million from NEA, Index Ventures, First Round Capital, and SV Angel, in addition to Climate Corp.

Customers using MetroMile’s new service — which is only available in Oregon because it needs state approval — place a device called the Metronome into their car’s onboard diagnostic car port, called the OBD-II. You might have never noticed it, but the OBD-II is standard port on all cars built after 1996, and has to be accessible in the front dashboard within three feet of the driver. The port is one of the ways that car data is being unlocked for third party developers (see my GigaOM Pro report, subscription required).

After the Metronome is plugged in, it accesses all the car computer’s data, and specifically collects (for this initial product) information about how much the customer is driving. The cellular connection in the Metronome enables MetroMile to process the data in the cloud, and the Metronome also has GPS to track distance. I was wondering if a cell phone app would have the brains to do this just as easily (and clearly more cheaply), and Friedberg told me in an interview that they need the data to be collected by a device to avoid fraud and ensure accountability.

Once MetroMile has the driving data, it can charge its customer only for how much — or how little — they’ve driven per month. Drivers who only occasionally use their car — say for weekend trips — would pay much lower rates than a person who commutes in their car an hour every day, each way.

While the idea sounds boringly simple, it’s meant to target a specific set of drivers that doesn’t drive all that much and who for years have been subsidizing those drivers that do drive a lot through traditional car insurance programs. Most of the accidents are done by drivers that drive a lot, says Friedberg. This new type of low mileage demographic tends to be young, urban, environmentally conscious, and maybe even a member of car sharing groups like Zipcar.

That target demographic is alive and well in MetroMile’s initial city, Portland, where the dream of the 90′s are also alive, and everything has a bird on it. MetroMile said it can offer this type of driver insurance for 20 to 50 percent less cost than traditional insurance, with equal or even superior coverage. Friedberg told me that MetroMile has discussed its insurance products with car sharing companies, but that the company is really targeting car owners, as car sharing drivers are still a small slice of the population.

MetroMile also shows the customer their driving data through an online dashboard. Down the road, MetroMile could offer other types of services using car data. I could envision a service that gives recommendations for how to cut down on driving (to save fuel costs), in the same way that Opower provides recommendations for lowering energy consumption.

In that way, MetroMile, like the Climate Corporation, could have a planet-friendly slant. Once car drivers know more data about their own driving habits, their likely inclined to drive their car more efficiently.

The traditional insurance companies are also looking at using devices and data to create new products, and the New York Times had an interesting article on this trend this weekend. Friedberg says that standard insurance companies won’t readily accept pay-per-mile insurance rates because then they would be forced to raise rates on the drivers that drive a lot more, to cover the lower mileage drivers; drivers that face higher rates then would just defect to competitors, said Friedberg. Car drivers are also wary of what types of data the car insurance companies are collecting with these new devices, and also how the insurance companies would use such data.

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BloomReach nets $25M to turn big data into marketing gold

Barb Darrow — Thu, 18 Oct 2012 19:04:47 +0000

BloomReach raked in $25 million in new venture funding in a C Series round led by New Enterprise Associates, bringing total venture funding to a healthy $41 million. The be-all-and-end-all for BloomReach, which emerged from stealth in February, is to help online retailers make the stuff they sell more easily found by would-be buyers so they’ll actually sell more of it.

As BloomReach CEO Raj De Datta told my colleague Derrick Harris early this year, companies don’t know how to show off their product catalogs in a way that best aligns with how customers search. Less than a quarter of web pages get any traffic from natural or paid search in a given month – a problem that will only get worse as the amount of online data grows. Their products are needles in an ever-expanding haystack. But if they know how people are searching for things and learn how to display their content better to suit that behavior, they can boost discoverability and thus sales.

“Understanding relevance of content to the way people express themselves turns out to be a difficult problem,” De Datta told Harris.

According to the company’s website, its core Web Relevance Engine, which is used by customers including Neiman Marcus Direct, Guess? and Drugstore.com:

analyzes consumer interactions across the web and semantically interprets content on more than one billion web pages daily. The cloud applications powered by the WRE dynamically adapt websites to capture existing consumer demand across search, social and advertising channels — driving relevance and significant incremental revenues across a large customer base including the retail, travel, education, financial and listings industries.

Retailers like Amazon and Wal-Mart are reportedly working on similar technologies but they are not commercially available. BloomReach, Mountain View, Calif., said it will double its sales and marketing efforts and triple its R&D funding to push more into mobile, social and video marketing channels. Current investors Lightspeed Venture Partners and Bain Capital also contributed to this round.

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