Will Tesla Prove to Be a Success?

Jun.30.10 | About: Tesla Motors (TSLA)

by Rob Day

Tesla (NASDAQ:TSLA) went out to IPO quite successfully. I was very glad to see the offering do well, at least on the first day (Tuesday). I've seen complaints about it going out too early (as yet unprofitable, and mass market car not due until 2011), but it does seem from the outside like a relatively well-run company with a compelling story. Low risk? Absolutely not. But I'm hoping they do well. Especially because this sector needs more success stories. LPs have been waiting very, very patiently for more big visible stories like First Solar (NASDAQ:FSLR)... Will Tesla prove to be one of them? Time, and stock market investor patience, will tell...

I just hope cleantech VCs realize that stories like Tesla, big capex and somewhat still risky at exit, will be exceptions, not the rule. Not to tar Tesla with this brush, but too many VCs have been hoping that their cleantech companies can IPO early, before they're profitable. This isn't 1998. And it won't be anytime soon. Then it was sock puppets and eyeballs. This time it's fabs and negative gross margin beta units.

The age of hunter-gatherer cleantech venture capital is over. When I started out in cleantech venture capital six years ago there were still plenty of unexamined subsectors, but by this point I don't know many subsectors that haven't been at least studied by multiple investors. We're now deep into the age of both cultivators (ie: those who look for steady, if unexciting, returns) and big game hunters. As always, big game hunters get the visibility (ie: press coverage). But to over-extend the analogy, over time the farmers provide most of the nutrition, er, returns.

But seeing Tesla do well does help the exit window for others, including the many less sexy companies out there tackling our many energy problems. Today's performance is proof that investors are still hungry for compelling cleantech stories to back. Of course, A123 (AONE) did well immediately after the offering as well. But I, and most other cleantech investors, are hoping that we see a nice sustainable story from this one. It certainly is a fun one. As a sector, not just as individual investors, we need to put some numbers on the board.

Disclosure: No positions