Conduit Ventures: Observations on Investing in Fuel Cells Daniel Carter 26 th February 2004

Conduit Ventures:Observations on Investing in Fuel Cells

Daniel Carter26th February 2004

Financing the Hydrogen Revolution, London

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► Conduit Ventures: Overview

► Our Portfolio Companies, and Why We Invested in Them

► Observations on Valuation and Fuel Cell Commercialisation

► Conclusions

Overview

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► Europe’s first specialist venture fund focused on fuel cell and related hydrogen technologies

► Only focussed fund w/investment in North America AND Europe

► Initial cornerstone investors in the Partnership:

► Focused on achieving financial returns for the Partnership

► Broad deal flow stemming from network and market positioning. >125 opportunities identified: 3 investments so far

Conduit VenturesA Unique Venture Fund

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Our Portfolio Companies and Why We Invested in Them

Company and

Location

Value Proposition

InvestmentRationale

Vancouver CambridgeBoston

Micro fuel cell stack developer based on patent-pending “flow-through” technology

Potential to shrink the size of portable fuel cells whilst making them more robust and reduce cost

Small-scale fuel cell power systems developer based on patent-pending technology

Low cost stack manu-facturing techniques adopted from high-tech filtration cassette production

Industrial efficiency-driven applications: forklifts, airport tugs, etc.

Strength of management, customer relationships, technology

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Market timing is critical

Source: TD Securities, 2004

Valuation Environment

Bubble

Revaluation

Low Point Recovery?

ConduitInvestments

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Valuation Environment

Date Company Amount Transaction

14/11: Plug Power (PLUG) $59 million Follow-on

14/11: Medis $13 million Follow-on

3/2: Hydrogenics (HYGS) $60 million Follow-on

3/2: CalPERS / CalSTRS $1.5 billion To invest in Clean Tech

10/2: Xantrex $53 million Files for IPO

12/2: Stuart Energy (HHO) $16 million Follow-on

17/2: FuelCell Energy (FCEL) $100 million Files shelf equity/debt

18/2: Millenium Cell (MCEL) $6 million Private placement

Increased public market activity indicates momentum…

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Timing is critical

Valuation Environment

Residential CHP

Val

uatio

n - U

nit S

ales

Time

Micro fuel cellsBackup & Standby

Remote Stationary

Automotive

2000 2003 2006 >2010

Conduit investment

► Valuation stabilising as realistic market introduction approaches► Sea-change expected with product launch

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► Supporting our portfolio companies for value creation and product introduction

► Taking advantage of market opportunity and seeking the right opportunities

► Working with the sector to promote awareness

► Catalysing investment by providing industry expertise to generalist investors, enabling investment in the right companies

Summary: What is Conduit Doing?

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Thank you for your interestDaniel [email protected]+44 (0)20 7242 9595