Solar inverter maker Enphase lines up more money

4 Comments

Enphase Energy wants to raise money from the public markets, but given how weak the IPO market is these days, the solar power conversion gear company appears to be relying on private investors first. According to a government filing Wednesday, Enphase Energy has boosted its plans to raise funding and has now raised $21.86 million from a fundraising goal of $81.86 million.

Back in June, Enphase had raised nearly $14 million on a $51.5 million fundraising goal. Enphase, based in Petaluma, Calif., is looking for all sorts of capital, including equity, debt and options.

Also back in June, Enphase said it was heading to the public markets, filed an S-1 and pegged the IPO amount at $100 million. The company, founded in 2006, is a pioneer in creating a market for microinverters for solar panels, which sit at the back of each panel and convert the direct current from the solar cells into alternating current to be used on site or feed the grid. The conventional design is to pair each inverter with about a dozen solar panels instead, a centralized approach Enphase and other microinverter developers say is less effective at tracking and improving the power output of each solar panel.

Microinverters are more expensive than central inverters, so a key to popularizing them involves convincing installers that adding the cost of microinverters is a worthy upfront investment because they can get more power out of the solar electric system during its lifetime.

The company has gotten backing from big-name venture capital firms, including Kleiner Perkins, RockPort Capital Partners and Madrone Capital. Enphase had raised $104 million by the end of 2010, including  a $63 million round announced in June 2010.

Though the microinverter market is new, it’s gotten a lot more crowded lately. Not only is Enphase facing startups such as SolarBridge Technologies and Enecsys, it also has to jostle with large inverter companies that unveiled microinverters this year, such as Power-One and SMA Solar Technology. Meanwhile, a whole set of companies is developing devices that would perform some of the functions of microinverters but leave the DC-to-AC conversion to centralized inverters. Companies in this space include two that recently raised venture capital: Tigo Energy and SolarEdge.

Enphase has to innovate faster and cut costs more quickly to stay ahead. The company launched its third-generation microinverter in June this year and has since announced new customers, including solar panel makers such as Upsolar and Hanwha SolarOne, which plan to attach microinverters to their solar panels before shipping the solar panels to their customers. Upsolar, in particular, will create a slot at the back of the panel to allow for the insertion and easier replacement of the microinverter.

Expanding its customer list and market reach is a good thing, of course, but it also means Enphase will need capital to meet demand and continue to roll out new products. It filed for an IPO at a time when the public market seemed receptive to cleantech companies. But evidence that the U.S. economy would remain weak for some time and the government debt crisis in Europe have made investors more skittish. Many solar companies’ stock prices have crashed this year. Enphase will have to wait it out.

Photo courtesy of Enphase Energy

4 Comments

david

Solar panels solved my problem pretty easy. I followed some plans and schemes and i was able to construct them pretty cheap. Installation is easy if you follow guidelines :)
My electricity cost is reduced around 75%-80% I haven’t calculated the exact percentage.
Getting plans for constructing solar panels is a must. Lot’s of people think that every plan and scheme works, well not really, most of them are just fake and rubbish. You can find help here http://twurl.nl/hvml4z

Solar panels can be the future energy solutions in my opinion.

C

Never a good sign to be raising capital after filing an S-1. This is a capital intensive business – customers are demanding longer payment terms, and it becomes very hard to fund growth. Enphase market share rise has flattened in California, and the company continues to have supply constraints. I wish them the best. Distributed electronics are an important innovation in solar PV

Ucilia Wang

Hmm. I don’t see why it isn’t a good sign to be raising capital after filing the S-1. If you need capital, then you have to get it somewhere. If the public market isn’t a good choice right now, then you turn to private equity.

C

I’m sure the last round of investors were told that “this is the last round we will need before an IPO”. It is a bad sign for current investors and employees who will most certainly be significantly diluted as the company did not achieve its promise of a liquidity event for investors.

Private equity is the most expensive money you can raise – so it’s always a bad sign to need it when you thought you wouldn’t.

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