Startup firm to receive new venture capital for building sites to refuel electric cars
Share with others:
Better Place, the closely watched startup that hopes to create vast networks of locations to charge electric cars, is set to receive a vote of confidence today, in the form of $350 million in new venture capital.
Although Better Place most likely will require billions of dollars more in financing, this investment is an important step for the company and its chief, Shai Agassi, an Israeli-American software executive who founded the company in 2007.
"Better Place is a huge experiment in how you sell and fuel vehicles, and these investors are becoming convinced this will make money," said Rod Lache, an analyst at Deutsche Bank. "It is a financial validation. Now we need to see technical validation and consumer validation."
HSBC is leading the new round of financing, contributing $125 million in exchange for a 10 percent stake in Better Place. That gives Better Place a market value of $1.25 billion.
"This is a pretty big round," Mr. Lache added. "I am impressed that they have succeeded in raising this amount of capital even before the business has started operating."
Both Mr. Agassi and HSBC executives portrayed the investment as a business-based decision, rather than as an effort to enhance the bank's green credentials.
Better Place is scheduled to make its commercial debut in 2011 in Israel and Denmark, but HSBC's investment could ease doubts about its complicated -- and expensive -- answer to the long-standing chicken-and-egg problem of getting electric cars on the road without the infrastructure to support long-distance driving.
In addition to the $125 million from HSBC, $225 million will come from Morgan Stanley Investment Management, Lazard Asset Management and Better Place's original investors, which include Israeli companies and VantagePoint Venture Partners in Silicon Valley.
All together, Better Place has raised approximately $700 million, including an initial round of financing in 2008 that brought in $200 million. HSBC's head of global capital financing, Kevin Adeson, will join Better Place's board.
The new funds, Mr. Agassi said, will be devoted to research and development, completing the company's infrastructure in Israel and Denmark, and eventually broadening its reach to include the United States, Australia and other countries in Europe.
First Published January 25, 2010 12:00 am
