Xtreme Power gets $29.5 million boost
Kyle-based maker of energy management systems expects giant jump in revenue in 2011
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.
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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.”
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.