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Conduit Ventures: Observations on Investing in Fuel Cells Daniel Carter 26 th February 2004

Conduit Ventures: Observations on Investing in Fuel Cells Daniel Carter 26 th February 2004. Financing the Hydrogen Revolution, London. Overview. Conduit Ventures: Overview Our Portfolio Companies, and Why We Invested in Them Observations on Valuation and Fuel Cell Commercialisation

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Conduit Ventures: Observations on Investing in Fuel Cells Daniel Carter 26 th February 2004

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  1. Conduit Ventures:Observations on Investing in Fuel Cells Daniel Carter 26th February 2004 Financing the Hydrogen Revolution, London

  2. Overview • Conduit Ventures: Overview • Our Portfolio Companies, and Why We Invested in Them • Observations on Valuation and Fuel Cell Commercialisation • Conclusions

  3. Conduit Ventures • Europe’s first specialist venture fund focused on fuel cell and related hydrogen technologies • Only focussed fund w/investment in North America AND Europe • Initial cornerstone investors in the Partnership: • Focused on achieving financial returns for the Partnership • Broad deal flow stemming from network and market positioning. >125 opportunities identified: 3 investments so far A Unique Venture Fund

  4. Our Portfolio Companies and Why We Invested in Them Company and Location Boston Vancouver Cambridge Value Proposition Industrial efficiency-driven applications: forklifts, airport tugs, etc. Small-scale fuel cell power systems developer based on patent-pending technology Micro fuel cell stack developer based on patent-pending “flow-through” technology InvestmentRationale Strength of management, customer relationships, technology Low cost stack manu-facturing techniques adopted from high-tech filtration cassette production Potential to shrink the size of portable fuel cells whilst making them more robust and reduce cost

  5. Valuation Environment Market timing is critical Bubble Revaluation ConduitInvestments Low Point Recovery? Source: TD Securities, 2004

  6. Valuation Environment Increased public market activity indicates momentum… DateCompanyAmountTransaction 14/11: Plug Power (PLUG) $59 million Follow-on 14/11: Medis $13 million Follow-on 3/2: Hydrogenics (HYGS) $60 million Follow-on 3/2: CalPERS /CalSTRS $1.5 billion To invest in Clean Tech 10/2: Xantrex $53 million Files for IPO 12/2: Stuart Energy (HHO) $16 million Follow-on 17/2: FuelCell Energy (FCEL) $100 million Files shelf equity/debt 18/2: Millenium Cell (MCEL) $6 million Private placement

  7. Valuation Environment Timing is critical • Valuation stabilising as realistic market introduction approaches • Sea-change expected with product launch Automotive VALUATION Residential CHP Valuation - Unit Sales Remote Stationary Backup & Standby Micro fuel cells Conduit investment 2000 2003 2006 >2010 Time

  8. Summary: What is Conduit Doing? • Supporting our portfolio companies for value creation and product introduction • Taking advantage of market opportunity and seeking the rightopportunities • Working with the sector to promote awareness • Catalysing investment by providing industry expertise to generalist investors, enabling investment in the right companies

  9. Thank you for your interest • Daniel Carter • Principal • dc@conduit-ventures.com • +44 (0)20 7242 9595

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