Braemar Nails Positive Exit by Selling LED Co. Albeo to GE

Dow Jones VentureWire
Yuliya Chernova

November 26, 2012

Braemar Energy Ventures saw a quick return on its $6.5 million investment in light-emitting-diode company Albeo Technologies Inc., which is being sold to General Electric Co .

"It was a short holding period and a nice gain," said Dennis Costello, managing partner at the venture firm. He declined to further discuss terms of the deal. GE and Albeo Technologies declined to discuss terms of the deal.

Braemar invested in the Boulder, Colo.-based maker of LED fixtures for commercial and industrial customers earlier this year. It provided practically all the equity in the Series C round, according to Mr. Costello.

The investment was one of the first from Braemar's new $300 million third fund and it is also the first exit from that fund, according to Mr. Costello.

At the time when Braemar invested, Albeo already had revenue and was growing without a huge capital investment, according to Mr. Costello. VentureWire previously reported that Albeo had $10.5 million in revenue in 2011, up from $1.7 million in 2008, and was profitable at the time of Braemar's investment.

In total, the company had raised $12.75 million from Braemar, Silicon Valley Bank , in the form of debt equity, and Green Spark Ventures, over the last five years, according to GE.

"We didn't expect the exit to be this quick...In my experience you don't pick the time to sell. It's the buyer. . . [GE] came forward on an unsolicited basis and purchased it. We didn't retain a banker," said Mr. Costello.

GE is buying the entire company, including its products, intellectual property, workforce and customer relationships, according to David Schuellerman, spokesman for GE Lighting . In an email, he wrote that Albeo has 50 full-time and 15 temporary employees.

GE is seeking to beef up its portfolio of LED products, especially expanding into products for industrial and commercial customers. "GE is not considered a specialist in fixture manufacturing," said Pallavi Madakasira, analyst with Lux Research Inc . She said that that is the reason it's not surprising that GE is moving into making acquisitions in the space.

Overall, the global LED market that is about $11 billion today will grow to $80 billion to $100 billion in the next decade, according to research by Lux Research. "Industrial and commercial segment will be a pretty big chunk of that," said Ms. Madakasira

"You should expect more such acquisitions," said Ms. Madakasira, from the likes of big corporations such as GE, Philips and others.

That is good for venture investors like Braemar. The firm has a large portfolio of lighting start-ups, and Mr. Costello said that some of the companies have similar characteristics to that of Albeo--limited capital requirements, customers that big corporations want to get access to, and a unique technology or sales strategy.

"The real reason for the interest in these downstream fixtures is that most companies have recognized that integration of LEDs into a whole system is not quite as simple as you might expect," said Mr. Costello.

In general, even as the LED market is growing, there are factors that are keeping the market back, he said, such as the slow development of the economy. The LED market, he said, "is partially driven by new construction."

Write to Yuliya Chernova at Follow her on Twitter at @ychernova

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