New Illinois VC Fund and the Growing Midwest Cleantech Cluster

Backed by federal and private funds, the Illinois Clean Energy Fund launched the end of June with $4.6 million in its coffers for investing in cleantech startups with two caveats: they must already have a funding source of $1.5 million and commercially available products. The Illinois Department of Commerce and Economic Opportunity has invested $2.3 million of federal money into the fund, which was matched by private funds raised by the Chicago-based Clean Energy Trust.

The fund will invest using convertible notes, ranging from between $100,000 and $500,000, into early-stage Illinois-based companies working in renewable energy, energy efficiency, smart grid, next-generation transportation and water resource management. The Clean Energy Trust — a nonprofit that helps launch, advise and fund cleantech startups, will run the selection program — leveraging its annual startup competition, the Clean Energy Challenge, to find and vet investment opportunities for the new venture fund.

Freshwater Advisors, a Chicago-based consulting firm, will provide advisory services. Clean Energy Trust board members include Nick Pritzker, co-founder of Tao Capital, Michael Polsky, CEO of Invenergy, and Antonio Gracias, CEO of Valor Equity Partners. Clean Energy Trust portfolio companies have raised more than $42 million in private and public funding to date.

Midwest VC Investors

The new Illinois fund in joins a growing group of cleantech VC investors:

Drive Capital - a $250 million venture capital fund based in Columbus, Ohio, started by Sequoia Capital alums. The fund led a $4M Series A funding round for Farmlogs in January, a startup producing Big Data for farmers. See our profile of FarmLogs here.

Energy Foundry – a cleantech venture capital fund created in April 2013 by the Illinois state government and funded with $22.5M from utilities, including Commonwealth Edison Co. and Ameren Illinois. In March, it invested in SiNode Systems, a materials startup based out of Northwestern University that is commercializing a novel silicon based anode technology for use in lithium ion batteries.

Huron Riveran Ann Arbor, Michigan-based venture capital firm that focuses on clean tech investments in the energy, transportation infrastructure and agricultural fields. It has invested in Ambiq Micro, a spin out of the University of Michigan, Root3 Technologies, and SideCar Technologies. The firm has also invested in three Ann Arbor companies: OptoAtmospherics, FarmLogs, and Covaron Advanced Materials. Last year, we profiled the fund’s launch.

VentureInvestors LLCa $200M venture capital fund founded in 1982 and one of the leading venture capital firms in the Midwest, based in Madison, Wisconsin. The fund makes seed and early stage healthcare and technology investments. Its clean tech investments include: Chromatin, Silatronix and Virent.

IllinoisVentures – a venture fund based in Chicago that makes seed and early-stage technology investments focused on research-derived companies in information technologies, physical sciences, life sciences and clean technology. Its clean tech investments include Chromatin, KGRA Energy, SolarBridge Technologies and Tetravitae Biosciences.

Cultivian Ventures – a Carmel, Indiana-based agricultural-technology-focused venture capital firm which launched a $34 million food and agriculture fund in 2008.  The Cultivian Sandbox Food and Agriculture Fund II raised $70 million in May 2013, and its directors expect to see it grow to around $150 million, see our profile of the fund’s launch. It partnered with Sandbox Industries, a Chicago-based venture capital firm and incubator founded by former Monsanto executives.

Midwest Cleantech Startup Standouts

On June 17, SiNode Systems, a 2012 Clean Energy Challenge finalist, announced it will receive $1 million in Phase II SBIR funding from the U.S. DOE. It also raised seed funding from Energy Foundry in March.  SiNode is commercializing a novel silicon based anode technology for use in lithium ion batteries, developed by Northwestern University research team led by Professor Harold Kung. The goal of the project is to develop improved Lithium-Ion batteries that increase efficiency and reduce cost, leading to better battery life and performance.

Chicago-based LuminAid, a patent pending solar inflatable light that was designed to fulfill the basic need for light in post-natural disaster situations, won the 2013 Clean Energy Challenge and $100,000 in prize money. LuminAid’s solar light has been used during Hurricane Isaac in Haiti and Hurricane Sandy.

And 2013 finalist Bearing Analytics, started by a team from Purdue has developed sensors to monitor bearing performance, was also a runner up in the DOE’s 2013 Clean Energy Business Plan Competition (see our story on the competition’s top startups.) The company focuses on developing sensors for the U.S. wind and railroad industries. Bearing Analytic’s presentation noted that industry currently loses $50 billion in equipment damage and downtime due to broken bearings, plus prematurely replacing bearings that are working fine.

Midwest’s Cleantech Development Hubs

Coalition: Loop is a clean tech focused company co-working space at the Gage Building in Chicago. Venture capital firm Energy Foundry is an anchor tenant.

And the University Technology Park provides more than 300,000 square feet of wet and dry lab and office space for growing companies focused on materials and life sciences, biomedical engineering, medical devices and diagnostics, green and clean technology, food safety, and information technology. It has helped launch more than 30 startups and successes include Chromatin Inc., a bioagriculture company that develops seed technology and employs 150 people and has raised $70 million in venture funding.

Argonne National Laboratory in Chicago is the first science and engineering research national laboratory in the United States. It is the largest national laboratory by size and scope in the Midwest. In November, the U.S. DOE announced that it had selected Argonne National Laboratory  to host the Joint Center for Energy Storage Research (JCESR), with a $120 million grant over 5 years. The goal for the JCESR is to improve battery technologies by a factor of five — five times cheaper, with five times higher performance — within five years

And the The Robert W. Galvin Center for Electricity Innovation at Illinois Institute of Technology is a major university initiative to improve the reliability, security, efficiency, and sustainability of the nation’s electrical grid and overcome obstacles to the effective adoption and implementation of the Smart Grid.The Center brings together researchers, industry, government, and innovators to “plug-in” to IIT’s smart microgrid, research laboratories and technology park, creating a hub – or sandbox – for new innovations in advanced grid technology.

 

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