Infusion for Enphase
Despite the gloomy climate for venture funding, investors continue to take a shine to Petaluma solar startup Enphase Energy.
The 3-year-old company is announcing today it has raised another $22.5 million to help power its plans to revolutionize the way solar energy is gathered.
The cash infusion -- its largest ever -- will help the company meet a sharp increase in demand for its micro-inverters, devices that increase the efficiency of solar panels by up to 25 percent, said Paul Nahi, Enphase's chief executive.
"The concept of the micro-inverter has absolutely exploded," Nahi said. "The challenge right now for us is all about growth. We have demand for the product coming in from all over the world."
Typical solar panels are strung together and their electrical output converted for household use by a large, high-voltage inverter. But Enphase has designed a system of micro-inverters that attach to each solar panel, increasing the total system's efficiency and simplifying installation.
The company's inverters have been manufactured at Paramit Corp., a small company in Morgan Hill. To ramp up production, Enphase is turning to Singapore-based giant Flextronics, a $30 billion firm with plants across the globe.
The company attracted a new investment firm, Madrone Capital Partners, to lead the latest round. Previous investment firms, which sunk $21.5 million into the company in two rounds in 2008, also participated in the new round, Nahi said.
To find a new venture partner in the current climate is "unheard of," Nahi said. The vast majority of new venture money is coming from insider rounds, where existing backers are tapped for additional investment, he said.
"Enphase's ability to raise funds in this challenging economic environment is a clear sign of investor confidence in the company's products and management," said Dan Kammen, a professor of energy at UC Berkeley who sits on the company's advisory board.
The addition of Madrone Capital Partners to its stable of backers is important because the Menlo Park-based firm has deep pockets and significant experience with renewable energy companies, Nahi said. These include companies like Tempe, Ariz.-based First Solar, which sold $1.2 billion worth of solar projects last year.
While the firm will ship much of its manufacturing to Asia, Enphase anticipates its growth will create a significant number of new jobs in Petaluma. The company has doubled its employees in the past year to 55, and expects that number to hit 80 this year or shortly thereafter.
"By the time we're done, it'll be many, many times that in Petaluma," Nahi said. "I would be surprised if it wasn't in the hundreds."
That will be welcome news to the county's high-tech industry, which has seen leaders like Agilent Technologies, JDSU and Medtronic shed thousands of jobs as the economy slumps.
While the recession and credit crunch have hurt some solar panel manufacturers, Enphase said demand for its products is soaring because solar manufacturers and installers have recognized the value of the micro-inverter approach, Nahi said.
Wiring traditional solar panels is high-voltage work, requiring specialized electrical licenses, which adds to the complexity and cost of typical solar systems. Commercial inverters can weigh tons, Nahi said.
By contrast, micro-inverters convert the electricity from each panel to AC current for household use, making them simpler to install, Nahi said.
The company estimates the installation and operation costs of Enphase systems are 15 percent less than typical solar arrays.
Jamie McJunkin, general partner of Madrone Capital Partners, will join the Enphase board of directors.
Enphase was founded in 2006 by two telecommunications veterans: Martin Fornage, an engineer with Advanced Fibre Communications before its 2004 purchase by Tellabs, and Raghu Belur, an engineer at Cerent before its 1999 purchase by Cisco Systems.