Better Spot, the Electric Car Charge Spot Firm to Receive $350 Million in Venture Financing
Despite Criticism, HSBC is Leading the Venture Capital Group & Investing the Bank’s Own Money
January 26, 2010 - Better Place, founded by Shai Agassi, an Israeli-American software engineer is set to close on a new round of venture capital financing of $350 million today.
The company intends to create a vast network of charge spots to charge electric cars. Many are questioning the company’s business model, and are privately stating that the company will need billions more in financing.
Better Place’s questionable business plan would result in consumers buying electric vehicles from automakers, but getting their batteries from Better Place. They would pay Better Place a fee based on the distance they drive. The company’s plans include thousands of charge points and “battery switching stations.”
Mr. Agassi, who has been described as a “salesman’s salesman” has portrayed his company’s business mostly in moral terms, by indicating concerns regarding global warming and the need to find renewable energy sources to replace fossil fuels. Consistent with his firm being on the global warming bandwagon, Better Spot’s website features penguins on its home page.
Better Place is planning on starting commercial operations in 2001 in Israel and Denmark. There model is seen by many as a complicated and expensive answer to the question of getting electric cars on the road without an infrastructure to enable long distance driving.
The venture capital investment group is being led by HSBC, which is itself contributing $125 million for 10 percent of Better Spot. While HSBC has been criticized for making the investment, primarily because it is a green investment, HSBC executives have gone out of their way to indicate that the investment is being made as a business based decision. In defending the investment, HSBC’s Anthony Berrnbaum, stated, “It could be a game-changer in its sector the way Google and Microsoft were in theirs.”
Investors joining HSBC include Morgan Stanley Investment Management, with an investment of $225 million, Silicon valley based VantagePoint Venture Partners, Lazard Asset Management and a group of Better Place’s original investors.
But, consistent with a view shared by many within Wall Street and the Silicon Valley venture capital community, Rod Lache, a Deutsche Bank analyst has stated, “Better Place is a huge experiment in how you sell and fuel vehicles, and these investors are becoming convinced this will make money. It is a financial validation. Now we need to see technical validation and consumer validation.”