June 23, 2011 / 1:05 PM / 8 years ago

Soros fund leads $25 million investment in energy-saver

SAN FRANCISCO (Reuters) - George Soros’s Quantum Strategic Partners is leading a $25 million investment round into a start-up that aims to cut electricity waste, the latest addition to the billionaire investor’s green-energy portfolio.

Transphorm, based in Goleta, California, is peddling a technology that cuts back on energy wasted when electricity is converted from alternating current to direct current. Typically, such waste disperses as heat.

Currently, power conversion wastes 10 percent to 12 percent of electricity, said Transphorm Chief Executive Umesh Mishra. The company’s power conversion module, made from gallium nitride instead of the traditional silicon, can eliminate almost all of that loss, he said.

Two years ago at the Copenhagen climate summit Soros promised to invest $1 billion in clean energy technology. He also announced a $100 million commitment to the Climate Policy Initiative, a San Francisco-based organization that advocates low-carbon growth.

Earlier this year, Soros Fund Management and Silver Lake announced a joint venture in Silver Lake Kraftwerk to invest in clean-energy companies. The new fund is currently raising capital.

Through various funds, Soros has invested in green companies including ethanol maker BioFuel Energy Corp, U.S. solar panel maker First Solar Inc, and Chinese solar company JA Solar, according to U.S. Securities & Exchange Commission filings. At the same time, his funds have investments in sectors that environmentalists complain about, such as coal company Peabody Energy Corp and oil company InterOil Corp, according to filings.

The infusion of cash from Soros allows Transphorm to scale production of its power-conversion modules to the volume its customers have asked for, Mishra said. He declined to name those customers, but said they are manufacturers of power-conversion units.

Transphorm’s first conversion product, geared toward computer servers, will become available later this year, he said. The company is also working on modules geared toward the solar photovoltaic industry and electric cars.

The investment comes on the heels of a $20 million funding round earlier this year from Google Ventures, Kleiner Perkins Caufield & Byers, Foundation Capital, and Lux Capital, all of which also participated in the latest round.

Previously, the company raised $12 million in a round led by Foundation. Its initial funding in 2007 was a $6 million round led by Kleiner that included backing from Lux and a private investor.

“We are just focused on increasing revenue at the fastest rate possible,” Mishra said, adding he believes the company will generate positive cash flow in about two years.

Companies working on competing products include Durham, North Carolina-based Cree Inc and Germany’s Infineon Technologies AG.

Reporting by Sarah McBride; Editing by Phil Berlowitz

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