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In some sectors, $100 million in venture capital would be enough for a startup to make some serious progress. Twitter’s funding at this point reaches only into the double-digit millions. But for V-Vehicle — a startup that just came out of stealth mode yesterday with plans to retool a factory in Louisiana to build high-efficiency, gas-powered vehicles — the $100 million invested so far by venture capital firm Kleiner Perkins, oil magnate T. Boone Pickens and others is only the beginning.
While the state of Louisiana has already committed $67 million for the project, as well as “work force training” worth more than $12 million, according to Louisiana’s News Star, V-Vehicle ultimately aims to raise some $400-$500 million through both equity and loans, including at least $263 million in federal loans.
That won’t be easy. Raising funds for manufacturing and commercialization has been a sticking point for other auto startups. The highest-profile example may be Tesla Motors. Last fall, the San Carlos, Calif.-based electric car startup planned to raise $250 million in new financing — including private financing and a loan guarantee from the Department of Energy — to build an assembly plant for its Model S sedan in San Jose, Calif. Private financing didn’t pan out, and Tesla now hopes to retool an existing facility in Southern California, relying entirely on the DOE loan program (which favors projects on brownfields) for $250 million in financing. At this point, Tesla is still waiting to get final word from the DOE before going ahead with the Model S plans.
Outside the U.S., Norway’s Think, which aims to make electric two-seater cars, has also been delayed by financing troubles at the manufacturing stage. The company got low-volume production up and running last October, but had to shut it down before the end of the year as it teetered on the brink of bankruptcy. After securing a bridge loan from investors earlier this year, it has taken until this week for Think to come close to a deal with new and existing investors, as well as the suppliers to which it’s indebted, in order to resume production.
It’s too early to dig into the strengths and weaknesses of V-Vehicle’s technology or business model — the startup is keeping mum on those details. But it’s also early to bank on funding coming through anytime soon from the DOE’s long-delayed Advanced Technology Vehicles Manufacturing program, which has dozens of applicants still waiting to find out if they’ll be receiving funds.