May 4, 2017
Portland-based Ocean Renewable Power Company is in the midst of raising $2.5 million in its second big equity round of fundraising.
The renewable energy company has raised $1.31 million out of a $2.5 million offering, according to paperwork recently filed with the U.S. Securities and Exchange Commission. The round so far includes three investors, according to the paperwork.
Besides putting new capital to work in the company, Chris Sauer, the company’s CEO, told Maine Startups Insider that this Series B investment round has also allowed the management team to completely reorganize the company.
“It was really a three-part transaction that completely recapitalized and restructured the company,” Sauer said. “The whole idea is to set us up for future growth, which this certainly does.”
The first part of the transaction was to convert all the private debt carried by Ocean Renewable Power Company LLC into equity. They then converted the LLC into a C Corp, and brought new equity into the new corporation, now called Ocean Renewable Power Company Inc.
“So, the net effect is if you looked at our balance sheet before the transaction, we were heavily laden with debt and not a lot of equity,” Sauer said. “Now if you look at our balance sheet, it’s quite the opposite. It really is setting us up for future growth”
This new equity round has so far brought three new investors into the company, including one major family office, Sauer said. The new capital is being used for general working capital purposes and will fund the company through the end of the year, he said.
While the company has generated some revenue, Sauer said it was a negligible amount. This is the company’s second big equity raise. In 2009, it raised $13.2 million in a round led by Caithness Energy, which has morphed into a private family office called Spindrift Equities.
Counting debt, ORPC has raised nearly $50 million, Sauer said. When including federal and state grants, the total increases to more than $80 million. While the restructuring swept most of the debt off the company’s books, it still owes a very small amount of debt to the Maine Technology Institute and Coastal Enterprises Inc., Sauer said.
Go-To-Market Strategy Begins in the Hinterlands
ORPC made headlines several years ago for becoming the first company in the world to generate electricity from the ocean’s tides (in Cobscook Bay in 2002) and a river’s current (Alaska in 2014) and deliver it effectively to a power grid. The past three or so years, though, the company has returned to the lab to make its technology more efficient and to reduce manufacturing costs, according to Sauer.
So far, the time creating “Version 2.0” of its underwater electricity-generation technology has paid off, Sauer said. He said the company has reduced manufacturing costs by more than 50 percent and should be ready to deploy Version 2.0 of its TidGen system in Cobscook Bay in Washington County in 2019, and its RivGen system in the Kvichak River in Igiugig, Alaska, the same year. However, it still has a $16 million backlog of projects related to grants it’s received for particular elements of its Version 2.0 technology.
Communities like Igiugig are where the company’s go-to-market strategy begins. It’s remote communities like this where Sauer said the company can compete on price with the existing solution of diesel-powered microgrids. There are more than 700 million people around the world living in remote communities that rely on diesel.
“It’s a dispersed market, but it’s a big market,” Sauer said. “And it’s a market where we can go to scale.”
As the company penetrates these markets and deploys more RivGen and TidGen systems — depending on the interior or coastal location of the remote community — its manufacturing costs will come down and eventually make it possible to target its second-tier market, which are countries that inherently have high electricity prices. Japan and Chile are two such countries, Sauer said.
“There are areas like that around the world where they have good tidal and river resources. Our pricing can’t quite get there right now, but we will be able to compete within a few years,” Sauer said.
Ultimately, as Ocean Renewable Power Company scales and is manufacturing 1000s of its systems, Sauer expects ORPC will be able to reduce its costs to a point where it will be able to compete in the U.S. market.
“But that’s still years away,” he said.
Read more about the Maine startup ecosystem here on Tech.Co
This article is courtesy of Maine Startups Insider, created by Whit Richardson, a journalist who’s covered Maine’s business community for the past decade. Visit Maine Startups Insider to read more about Maine’s startup community and subscribe to the weekly newsletter.
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