Bloom Energy Continues Capital Buildup with $130 Million
By Yuliya Chernova
Wall Street Journal
8:15 am ET, Jan 20, 2015
K.R. Sridhar, co-founder and chief executive officer of Bloom Energy Corp., holds a fuel cell for the company’s Bloom Energy Server during the launch of the solid oxide fuel cell electricity generation system, at the Tokyo Shiodome Building in Tokyo on Tuesday, June 17, 2014. Bloomberg News
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Many investors hoped that Bloom Energy Inc., one of the most well-capitalized venture-backed clean-tech companies, would be filing for an initial public offering by now. Instead the maker of fuel cells is raising more private capital, Venture Capital Dispatch has learned.
Sunnyvale, Calif.-based Bloom, which has already raised more than $1.2 billion in equity since it was founded in 2001, is looking to raise $160 million in the form of convertible notes, of which about $130 million had been raised by Dec. 19. The information is contained in an email to clients from Spruce Investment Advisors, a manager of funds that hold Bloom shares, viewed by VentureWire. It is unclear who provided the $130 million.
Representatives of Spruce Investment Advisors didn’t respond to requests for comment. Bloom Energy declined to comment.
A person familiar with the situation confirmed the broad outlines of the new fundraising.
Convertible notes are essentially loans provided by investors that may convert at some future date to equity. The email from Spruce says the notes sold by Bloom would convert to preferred stock in the company’s Series G round in the event of an IPO “assuming an initial offering price of at least $25.76 per share.” The convertible notes have an annual interest rate of 8% and have a term of 36 months, according to the email.
The company held a first closing of its Series G round in 2011. The pre-money valuation of the company in that round was $2.7 billion, VentureWire reported previously. Series G shares were offered at $25.76 per share, according to VentureWire records.
Bloom Energy uses fuel cells to convert natural gas into electricity. It places its power-producing units in office buildings, data centers and other customer locations, and signs long-term contracts to supply electricity to the customer. Its business has benefited from myriad government subsidies in states including California and Delaware.
The company had installed more than 130 megawatts of its units in the U.S., as of August, it said. By comparison, globally, 150 megawatts of fuel cells for all types of uses were shipped in 2013, according to a report by the Department of Energy. Although its business is growing, Bloom Energy still appears far from having a unit in every home, as its chief executive KR Sridhar said in 2010 would happen five to 10 years later.
Mr. Sridhar thought he would need $100 million to build the business to scale when he first approached John Doerr, a partner at Kleiner Perkins Caufield & Byers and a Silicon Valley icon, back in the early days of the company, Mr. Doerr said in an interview with that aired in 2010 on CBS News’ “60 Minutes.” In fact, the company has now raised more than $1.2 billion.
In addition to Kleiner Perkins and fellow venture heavyweight firm New Enterprise Associates, numerous individuals also have money invested in the company dating back a few years, through pooled investments in funds organized by the now-defunct brokerage firm Advanced Equities. Those funds are now being managed by Spruce, of Stamford, Conn.
Institutional investors also include Morgan Stanley and Madrone Capital, as well as pension fund managers Alberta Investment Management Corp., of Canada, and the New Zeal and Superannuation Fund. Other backers have included European utility E. ON, DAG Ventures, GSV Capital and Mobius Venture Capital.
Besides a strong investor roster, Bloom Energy compiled a who’s-who of directors. In addition to Mr. Doerr, the company’s board includes AOL co-founder Steve Case, former U.S. Secretary of State Colin Powell and Scott Sandell, a general partner at NEA.
Two years ago Mr. Sandell told Reuters that Bloom Energy was a good IPO candidate for 2013 or 2014. Mr. Sandell declined through a spokeswoman to comment for this story, citing restrictions on discussion of portfolio companies during fundraising. NEA is in the process of raising a new fund, as VentureWire recently reported.
Write to Yuliya Chernova at yuliya.chernova@wsj.com. Follow her on Twitter at @ychernova
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