Venture capital group gambles on wind power

Gargi Chakrabarty, Rocky Mountain News

Published October 13, 2006 at midnight

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Altira makes bets.

On startups.

When it hits a bull's-eye - that is if a startup is acquired or goes public - the Denver-based venture capital fund makes big bucks.

In past years, Altira has made successful bets, mostly on technology startups in the energy and renewable-energy sector.

Its latest gamble is wind power, specifically Southwest Windpower Inc. of Flagstaff, Ariz., which assembles and installs micro wind turbines.

Since 2004, Altira has pumped nearly $6 million into the company, helping double its staff to 85 and beef up its distribution network to 55 countries.

Peter Edwards, managing partner at Altira, expects to collect a payout in two to five years.

"I am very confident that (micro wind turbines) will take off in a big way," Edwards said. "The only variable in my mind is how long it's gonna take."

Edwards met the co-founders of Southwest Windpower, Andrew Kruse and David Calley, in Denver four years ago. Edwards said he was impressed with the entrepreneurial skills of the duo, both college dropouts.

"This dream of wind turbines just got hold of us," Kruse said.

Kruse and Calley began their company in a garage in rural Arizona, north of Flagstaff, in 1996.

For seed capital, they got $20,000 from Calley's father and drew another $10,000 on credit cards. Since then, the company has sold more than 100,000 wind turbines worldwide.

This year, Southwest Windpower is on track to pocket about $12 million in sales, 50 percent more than a year ago. But much of its sales target hinges on the success of "Skystream" - a small wind turbine that can be hooked to the electrical grid in urban areas.

The turbine, developed for residential use, can power more than half of the electrical needs of an average home when the wind is blowing. A homeowner can sell back excess electricity to its utility, if the latter agrees.

Scientists at the National Renewable Energy Laboratory worked with Kruse and Calley's team on Skystream (which doesn't need batteries). They tested its 12-foot blades at NREL's facility in Golden.

Now they want to test it at Chuck Courtad's home in Golden.

Courtad and his wife, Jeanette, both dentists and the parents of two children, say the 1.8-kilowatt Skystream would cover 30 percent to 50 percent of the electrical needs of their office building.

The system, including installation, would be priced between $8,500 and $11,000 when it is sold commercially later this year. But the Courtads got a big discount because their system is a test.

The 35-foot-tall wind tower is scheduled to be installed Wednesday.

Courtad said he requested Southwest Windpower to test the system on his property because he wanted his children, ages 7 and 9, to be acquainted with renewable energy.

"We know the climate we are going to be living in will have problems," Courtad said. "We are hoping we can involve our children with renewable energy right from youth, (and) we believe there will be a race to improve the atmosphere in the future."

Southwest Windpower is betting on that, as is Altira.

Altira's Edwards and his partners, Jim Newell and Dirk McDermott, have successfully read the future in past years.

For example, they invested upward of $1.5 million in St. Paul, Minn.-based Windlogics Inc. The company helps people decide if wind power is a viable option at their homes and businesses. Windlogics recently was acquired by FPL Energy, a subsidiary of Florida Power & Light.

"I can tell you we were very pleased with the outcome," Edwards said, although he declined to reveal the profit figure.

Altira has invested in other money spinners, including Canyon Offshore, a supplier of robotics for undersea oil and natural gas exploration, which was acquired in 2001, and Denver-based RC Squared, a software provider to the oil and natural gas industry.

"We expect Southwest Windpower will be a success," Edwards said. "I expect the company to either get acquired or conduct a public offering in three to five years, maybe two."

chakrabartyg@RockyMountainNews.com or 303-954-2976

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