Xtreme Power gets $29.5 mil­lion boost

Kyle-based maker of en­ergy man­age­ment sys­tems ex­pects gi­ant jump in rev­enue in 2011

Austin American-Statesman - - BUSINESS - By Barry Har­rell

KYLE — Even in a tough econ­omy, Xtreme Power Inc. is win­ning the fa­vor of in­vestors.

The Kyle-based com­pany — which makes en­ergy stor­age and power man­age­ment sys­tems for util­i­ties, wind farms and man­u­fac­tur­ing com­pa­nies — has just raised $29.5 mil­lion in ven­ture cap­i­tal.

The in­fu­sion of cap­i­tal comes amid ma­jor growth for Xtreme Power. The pri­vately held com­pany’s rev­enue will top $20 mil­lion this year, a nearly 14-fold in­crease from its $1.5 mil­lion in rev­enue in 2009, said founder and CEO Car­los Coe. Coe also pre­dicted the com­pany’s rev­enue could top $75 mil­lion in 2011.

The new money, he said, will be used for technology devel­op­ment, the ex­pan­sion of pro­duc­tion of ex­ist­ing prod­ucts and as work­ing cap­i­tal for large-scale power man­age­ment projects, such as a re­cently an­nounced power grid sys­tem in Hawaii to store and reg­u­late power from wind tur­bines.

Among the ma­jor in­vestors in this round of ven­ture fund­ing are Besse­mer Ven­ture Part­ners; Dow Chem­i­cal Co., through its ven­ture cap­i­tal group, Fluor Corp.; and pre­vi­ous in­vestor SAIL Ven­ture Part­ners. Other in­vestors in­clude POSCO and Sky­Lake In­cu­vest and Co.

“Some of these com­pa­nies we’ve been talk­ing to for more than a one-year pe­riod,” Coe said. “For com­pa­nies to in­vest in you, it’s not a snap­shot de­ci­sion. They have to know about you, watch you op­er­ate over a pe­riod of time.”

Coe said that dur­ing its cap­i­tal cam­paign, Xtreme Power wasn’t look­ing only for fund­ing, but also for com­pa­nies that could be “strate­gic in­vestors.”

“Strate­gic in­vestors, to us, would be large in­dus­trial com­pa­nies that have re­sources and in­sight to help us ex­pand and grow the com­pany to the next level,” Coe said. “For the mar­ket­places that we’re in, these are com­pa­nies that are in­ter­ested in tech­nolo­gies that have a rel­a­tively long life to them.”

As part of the new in­vest­ments, Umesh Pad­val of Besse­mer Ven­ture Part­ners and Wal­ter Schindler of SAIL Ven­ture Part­ners joined Xtreme’s board of di­rec­tors.

Con­tin­ued from B6

Pad­val said that af­ter track­ing Xtreme Power’s progress for 18 to 24 months, his firm de­cided to in­vest in the com­pany be­cause it had “a ma­ture technology, a prac­ti­cal technology, with a good cost struc­ture.”

“We also liked the fact that they had some date on their de­ploy­ment (for the project in Hawaii.) That com­bi­na­tion of ma­ture technology and de­ploy­ment gives you con­fi­dence in a com­pany,” Pad­val said.

Pad­val said Besse­mer Ven­ture Part­ners would be in­volved in help­ing Xtreme Power grow.

“We are not pas­sive in­vestors,” he said. “We do in­vest­ments only ... in com­pa­nies where we are go­ing to play an ac­tive role.”

Coe said a small per­cent­age of the newly raised $29.5 mil­lion would go to­ward work at the com­pany’s in-the-works man­u­fac­tur­ing plant in Michi­gan. In Au­gust 2009, Xtreme Power an­nounced plans for the plant — which will make large-scale power-stor­age sys­tems — at a for­mer Ford Mo­tor Co. com­plex in Wixom, Mich., north­west of Detroit. The de­ci­sion to lo­cate the plant there was aided by an in­cen­tive pack­age from the State of Michi­gan es­ti­mated to be worth more than $200 mil­lion.

At the time, Michi­gan of­fi­cials said Xtreme Power might hire as many as 2,500 work­ers be­tween late 2011 and 2014. Coe said it was too early to say whether that num­ber would be reached — he said the state’s es­ti­mate was “at the up­per bounds” of what Xtreme Power could even­tu­ally ex­pect at the site — but said his com­pany ex­pects to have at least 500 em­ploy­ees work­ing at the Michi­gan site by the end of 2012.

Xtreme Power, which was founded in 2004, has about 160 em­ploy­ees be­tween its head­quar­ters in Kyle and a fa­cil­ity in Ok­la­homa. Coe said he ex­pects the com­pany will have about 200 em­ploy­ees by the end of this year, and Xtreme Power re­cently leased 5,000 square feet of of­fice space on Congress Av­enue in Austin for its sales and mar­ket­ing team.

Xtreme Power re­ceived a $2 mil­lion grant from the Texas Emerg­ing Technology Fund in 2007, and Coe said there are no plans for his com­pany to move its head­quar­ters out of state.

“The State of Texas was one of our big in­vestors. ... They were one of our great part­ners for us early on,” he said. “And our com­mit­ment to the State of Texas is large; we ex­pect to grow up and be a large com­pany, and that ... part of its cen­ter of as­sets is go­ing to be here in Austin.”

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Xtreme Power of Kyle makes en­ergy stor­age and man­age­ment sys­tems that con­sist of the black metal racks that hold Pow­erCells – 1-kilo­watt dry-cell bat­ter­ies – and the gray metal cab­i­nets, which hold in­dus­trial-grade elec­tron­ics. Util­i­ties, wind farms and man­u­fac­tur­ers use the sys­tems.

Car­los Coe CEO said the money will sup­port technology devel­op­ment, power man­age­ment projects and the ex­pan­sion of pro­duc­tion.

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