The CleanTech Market Opportunity

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• The CleanTech Market Opportunity

Confidential
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Element Ventures - Highlights

• 250 million - capital under management
• Focused exclusively on CleanTech
• Institutional Limited Partner base
• Experienced General Partners with deep domain
  expertise
• Successfully managed 375 million in four prior
  CleanTech funds
• Advent Energy I, Advent Energy II, EnerTech I,
  EnerTech II
• Strong financial performance
• 72 gross IRR since 1995 in CleanTech
• 3.5x cash-on-cash return on realized investments
• Proven strategy
• Invest where resource constraints are
  economically important
• Focus on market-driven solutions with compelling
  value propositions
• Exceptional reach and world-class investment
  infrastructure
• Unique network for technical expertise and
  portfolio company support

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What is CleanTech?

• CleanTech Resource Management through Resource
  Lifecycle
• Variety of Resources
• Affects most Industries

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EnviroTech to CleanTech
EnviroTech (1980 Early 1990s)
CleanTech (Late 1990s Today)
Economic Decisions Productivity-based
Purchasing Proactive (clean fuels) Material
Science Collaborative Engineering Rapid Growth
Markets Entrepreneurial Mentality

• Regulatory Driven Decisions
• Compliance-based Purchasing
• Reactive (end of pipe)
• Chemical Science
• Traditional Engineering
• Slow Growth Markets
• Save the World

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CleanTech Market Overview
CleanTech products services account for 150
billion globally with 5 10 year growth rates
projected at 354
Sources 1. http//hebe.statenet.com/leg/wp/snlegw
hitepaper.pdf. 2. A typical eight inch silicon
wafer requires 2,800 - 3,200 gallons of high
purity water to manufacture. PPRC. 3. US
Department of Commerce Manufacturing in America,
January 2004. 4. CleanTech Venture Network,
CleanTech Achieving Competitive Venture
Returns October, 2004.
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CleanTech Market Drivers

• Resource constraints
• Energy supply and demand imbalance
• Shortages of clean air, clean water, and clean
  power
• Aging power and water delivery infrastructure
• Global competition
• Increasing focus on resource efficiency and cost
  of production
• Corporate responsibility for product lifecycle
  management
• Tightening environmental regulation
• Acceleration of global concern and government
  mandates
• Public awareness and shareholder influence
• Technological advances
• Ability to apply advances in other fields to
  resource constraint problems
• Biotech, sensing, communications, IT, advanced
  materials, and power electronics

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Historical Commodity Prices
Source FactSet Research Systems Bloomberg.
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Attractive Investment Opportunity

• CleanTech has emerged as a high-potential
  investment space
• Accelerating rate of new CleanTech business
  formation
• More seasoned entrepreneurial pool
• Leveraging technology advances across multiple
  fields
• Currently undercapitalized by institutional
  venture capital
• Reasonable valuations (but changing)
• Less competition (but changing)
• Poised for aggressive growth over the next decade
• Fueled by strong economic, regulatory, and
  technology drivers
• Improving capital markets
• More than 4 billion invested in upwards of 500
  CleanTech venture deals since 20021
• Over the last two decades the number of exits and
  the acquisition multiples have increased

Source 1. Vortex Energy LLC CleanTech Venture
Investing Patterns and Performance March 2005.
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Environmental Tech vs. CleanTech
CleanTech
Environmental Technology
Source Vortex Energy LLC
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Growing CleanTech Exit Opportunities

• MA activity has increased at a 95 CAGR over the
  last four years
• IPO activity has increased at a 73 CAGR over the
  last four years

Sources Capital IQ, New Energy Finance. As of
12/31/2005.
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Emerging Number of Nanotech Cleantech Cos
2005
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Emerging Cumulative Capital in Nanotech
Cleantech 2005
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Generation Technology Costs, 19802004
Drivers technology changes, fuel prices and
interest rates