Themes
The first decade of the 21st century has been marked by rapid changes in the economics of energy generation, distribution, and consumption. Technologies considered uneconomic just a few years ago have risen from obscurity to form a new global industry of alternative energy and cleantech, now among the fastest-growing sectors of the global economy that has attracted north of USD 250 billion in investments in 2011 (BNEF).
Nanotechnology
Nanotechnology has shifted from the discovery phase, dominated by research, to the commercialization phase, where products are rapidly becoming available. Its impact is being seen in fields from medicine to energy and manufacturing. The global nanotechnology market is projected to grow significantly in the immediate future. By 2014, it is estimates that USD 2.6 trillion in global manufactured goods will incorporate nanotechnology. I2BF manages two nanotechnology focused funds. One fund was launched in December 2011 and is co-managed with leading Russian bank, VTB Capital, focused on Russia and Kazakhstan. The fund was lauched with seed capital from the Russian Corporation of Nanotechnology, RUSNANO, and Kazyna Capital Management. The second fund was launched with RUSNANO in June 2012 and is focused on late-stage investments within the resource sector with an additional focus on agriculture and water.
Medicine & Biotechnology
Diagnostics, drug delivery, therapeutics
One of the fields, where nanotechnology presents revolutionary opportunities, is modern medicine. The field of applied nanotechnology in life sciences is constantly growing and has already led to advances in many areas of medicine and biomedical sciences. Thanks to nanotechnologies, we can better understand the function of biological structures and their interaction, which enables the engineering and manipulation of biological systems for diagnosis and treatment of various diseases. In addition, many novel nanomaterials and nanodevices are expected to improve human health and quality of life. There are a number of global trends, such as ageing population, increased life expectancy and quality of life throughout the world, which creates attractive investment opportunities in healthcare. I2BF believes that while nanotechnology in life sciences is having the potential to significantly change modern medicine, it is still on a very early stage of development, making this field very appealing for venture investments. We see the most promising areas in early disease detection, effective drug delivery, cancer treatment and minimum invasive treatment for heart disease, diabetes, HEV and other diseases.  
Oil & Gas
Catalysts, exploration technologies, efficient exploiting of unconventional hydrocarbons
While it is well known that nanotechnologies have significantly contributed and advanced in a number of industries, such as medicine, electronics and cleantech, they are also expected to present game-changing improvements to the oil and gas industry. With global energy demand projected to increase by 60% over the next 30 years, there is no way for current energy supply rather than to become more efficient and environmentally sound and that is exactly what nanotechnologies can enable. They offer tremendous potential to increase recovery of new and existing reservoirs, make economically viable to exploit unconventional hydrocarbons, improve exploration efficiency and modernize infrastructure. With the extensive use of nanocatalysts refining and fossil fuel processing has already become the pioneering area for nanotechnologies in the oil and gas industry. For example, mesoporous catalysts have significantly impacted downstream refining. These applications are expected to continue growing, but the focus of the industry is now shifting towards exploiting unconventional resources, such as heavy oil, tight and shale gas, and it is anticipated that nanotechnology can be a critical component of this revolutionary change. I2BF believes that most successful companies in this field are the ones involved in accelerating this change, for example, by creating new nanocatalysts and efficient chemical methods to process heavy oil, by developing new exploration technologies and by implementing gas-to-liquids processes for stranded gas. 
Energy
Energy storage, thermoelectrics, fuel cells, solid-state lighting, new materials
By creating more effective materials, nanotechnology is driving efficiency gains across the energy industry by improving efficiency and productivity, at the same time reducing energy and raw material consumption. Examples include nano-enhanced solar panels or high performance LED lighting. Nanotechnology presents opportunities not only for marginal improvements in resource efficiency but, in some areas, for a step change. It is believed that nanotechnologies hold promise for the next leap forward in energy technologies, improving life all over the world.   One of the greatest applications for nanotechnologies in the energy sector is power storage, where work is being concentrated on the development of higher density batteries and ultracapacitors. A second major area could be the deployment of thermoelectric material to harvest power from huge number of domestic and industrial waste heat sources, ranging from car-exhausts to power station chimneys. A third area is improving performance and cost of fuel cells. There are plenty of other examples including, but not limited to solid-state lighting, efficient transmission lines and nano-structured materials for wind blades.  
New Materials
New materials, isolating materials, protective coatings, nanostructured materials, nanocomposites
Many fields of human activity are driving increase of demand for new materials. One of the major trends of the last decade is increasing energy efficiency of buildings and infrastructure objects. Materials reducing thermal losses are required for that task. Nanotechnology presents a solution: different kinds of nanoaerogels with very low thermal conductivity used in construction can significantly reduce residential and commercial energy bills. Another promising application of nanotechnology is new protective nanocoatings. Such nanocoatings are very stable to thermal and toxic influence and increase hardware life. Developed for industry initially, such materials have found new applications in other areas, i.e. building (concrete) corrosion protection, automotive, aerospace industry, etc. New nanostructured materials are being introduced everyday ranging from various kinds of fullerenes with application for electronics, graphene (electronics, cleantech, energy storage) to nano additives into cosmetics and textile. One of the most promising types of new materials are nanocomposites (nano metal matrix composite particularly) with much better material properties – toughness, thermal tolerance, and corrosion tolerance. New nanocomposites are particularly needed within automotive and aerospace industries.
Water
Membranes, bionanomaterials, waste water treatment
Significant part of the Earth lacks access to fresh water. Humanity will face clean water shortage in the nearest decade. Nanotechnology helps to introduce new highly effective membranes for water purification/desalination. With new nanostructured materials, advances to polymer membranes have been made, providing more effective and higher lifetime membranes. Extensive research has been also directed to develop carbon-nanotube (CNT) membrane, which is considered to be the next breakthrough in water treatment industry. Bionanomaterials, such as aquaporines, are introduced for membranes used in semiconductor industry, where distillated water is required. Finally, nanotechnology helps to improve industrial membranes used for wastewater treatment/recycling, which is considered to be one of the key solutions to potential water shortage and valuable resources extraction (i.e. oil-water separation). Industrial wastewater can be very toxic, so membrane lifetime requirement is a critical factor here and nanotechnology can help to improve it significantly. 
Clean Technology
I2BF believes that this is an opportune time to make strategic investments in renewable energy and clean technology. Renewable energy and traditional energy markets are in the process of decoupling. With low asset prices and many companies having difficulty arranging financing, I2BF believes that there are underpriced “stranded” assets in the renewable energy space. I2BF has been investing in the space since 2006 and currently manages two clean technology focused venture capital vehicles totalling USD 110 million is assets across 20 portfolio company investments. Investments are spread geographically across the United States, Europe, Asia and Latin America with typical first round investments ranging between 0.5 and 5 million USD.
Solar Energy
Next generation technologies (thin film silicon, advanced deposition) - CPV technologies
Solar energy technology uses the “PV effect” to capture sunlight and convert it into electricity. Typically, solar PV cells are made by sandwiching together two thin layers of semiconductor material. Today’s most common solar PV technology (90% of the market) is based on silicon semiconductors and uses manufacturing processes and materials similar to those of the microelectronics industry. Crystalline silicon (c-Si) cells dominate the solar PV industry and will continue to do so in the near future. Since it was pioneered in the 1950s, the technology is well understood and relatively mature. Its primary disadvantage for many years was its high cost, but recent cost reductions have allowed the PV market to expand dramatically. In addition, the solar PV industry is rapidly developing new materials and processes to increase cell efficiency (the amount of solar energy converted into electricity per unit of surface area). New technologies are also lowering costs by using less semiconductor material and streamlining production.
I2BF believes that solar energy offers a unique opportunity to address the energy-related challenges of our planet and will play an integral part in that endeavour. The industry has already grown to the multi-billion dollar size but many solar technologies are still in the early stages of development. The potential for new breakthroughs and growth of the market should not be underestimated and these dynamics continue to make solar investments appealing today.
Portfolio Companies:
Wind Energy
New materials - innovative design and cost efficiency - distributed generation
Wind turbines extract kinetic energy from moving air flow (wind) and convert it into electricity via an aerodynamic rotor connected by a transmission system to an electric generator. Today’s standard turbine has three blades rotating on a horizontal axis, upwind of the tower, with a synchronous or asynchronous generator connected to the grid. Two-blade, and direct-drive (without a gearbox) turbines are also produced. While the general design of wind turbines has become fairly standardised, there is still room for increases in efficiency. More efficient blades and drive trains, lighter nacelles (rotor plus generator) and fewer components mean a higher electricity output per unit of materials required in the manufacturing process. Subjects for further research, specific to wind energy technology, include more refined resource assessment; materials with higher strength to mass ratios; advanced grid integration and power quality and control technologies; standardisation and certification; development of low-wind regime turbines; improved forecasting; increased fatigue resistance of major components such as gearboxes; better models for aerodynamics and aero elasticity; generators based on superconductor technology; deep-offshore foundations; and high-altitude “kite” concepts. I2BF believes that wind energy, while being the most mature of renewable energy technologies, is still poised for healthy long-term growth due to cost reductions and technology advances, so investments in wind can be very lucrative in the future. The most promising technologies are those which improve efficiency of wind energy or reduce capital costs.
Energy Efficiency
Smart grid technologies and software - project integration - energy efficient lightning
Increasing energy efficiency is considered to be the key to achieving emission reduction targets fast and cheap. Governments have approved large stimuli packages for energy efficiency programs, as “on average, an additional USD 1 investment on demand-side electricity avoids more than USD 2 investment on the supply side” (The IEA). Furthermore, with advances in different technologies, energy efficiency systems (smart metering, demand-supply management, advanced lighting, etc.) are becoming cost effective independently of governmental support. 
I2BF believes investments into these following areas can bring particularly great benefits:  — LED-based lighting systems, as further quality improving and cost decrease of light emitting diodes make such systems a superior product;   — Smart metering systems, as meters and power electronics is becoming cheaper, so cost effectiveness of such systems is obvious;   — Advanced (Electronically controlled or “smart”) HVAC systems (including HVAC metering), as significant part of power consumption is used for heating, ventilation, and conditioning;   — Advanced building materials (including smart windows), as usage of such materials will send HVAC costs lower;   — Advanced vehicle technologies, as such technologies will definitely help to decrease emissions and satisfy strict legislations introduced in EU and US, while keeping vehicle cost low. 
Portfolio Companies:
Power Storage
New materials - utility scale storage - ultracapacitors and other next generation technologies
New technologies allow for more efficient power backup systems for uninterruptable power supplies (UPS) and power quality systems. As intermittent sources of renewable energy generation increase as a percentage on the grid, demand for energy storage will increase in order to supplies to the demand curve—regardless of when power is generated. Finally, the increasing popularity of hybrid and electric vehicle engines is another strong factor for the increasing demand for better energy storage.
While energy storage technologies are crucial for development of renewable electricity and automotive energy efficiency solutions, the sector is relatively underdeveloped and under-invested. I2BF believes that future demand provides spectacular growth opportunities in the sector and investments in energy storage are not to be overlooked in any balanced renewable energy portfolio.
Portfolio Companies:
Biofuels & Renewable Chemicals
Cellulosic ethanol - second generation feedstock technologies - advanced green chemical processing
Biofuels broadly encompass any fuels created from biological feedstock. The most common biofuels are ethanol and biodiesel, but almost any alcohol produced from biomass may be considered a biofuel. The same goes for numerous complex chemicals derived from biomass that are usable as fuel substitutes. The simplest way to produce biofuel is to convert edible oils (such as any cooking oil) into biodiesel and to convert edible carbohydrates (such as corn or sugar) into alcohols. 
Second generation biofuels are produced from inedible and often otherwise useless feedstock. The primary second-generation feedstock is cellulose, the most abundant biomass on Earth, which is largely wasted or combusted (i.e. wheat straw, corn stover, sugarcane bagasse, various wood waste). The other promising feedstock for second-generation biofuels production is micro algae. Algae possess numerous advantages: easy genetic manipulation, high yields (x10+ times compared to terrestrial crops) and the ability to be grown virtually anywhere in any climate. Inedible and more complex feedstocks make second-generation biofuels different from their predecessors - the food versus fuel dilemma has been eliminated, input prices are low and expected to be stable while output is much more diversified and can include pharmaceuticals, fertilisers, and high-value and speciality chemicals as examples. Regardless of feedstock or type of fuel produced, forward-looking companies developing second-generation biofuels with a holistic biorefinery perspective have significant advantages over companies focusing solely on fuel production. I2BF expects most successful second-generation companies will be defined by the best and most varied by-product conversion technologies, rather than solely by biofuels margins.
Portfolio Companies:
Water Purification and Management
Produced industrial water treatment (including oil water) - optimisation of municipal water treatment - water desalination and re-use
Clean water shortage is a serious problem around the world. Moreover clean water shortage is set to increase in the future, making water purification and contamination monitoring markets very promising. In the US, up to 42 millions of Americans (according to US Geological Survey estimation) use groundwater, which is vulnerable by low-level contamination. Additionally, US water systems consist of large networks of storage tanks, valves, and pipes that transport clean water to customers over vast areas, leaving them exposed to multiple points of potential contamination. One of the biggest problems of water and wastewater treatment market is the outdated inefficient hardware. I2BF is looking for new energy effective solutions, which help decrease energy/electricity consumption and/or increase water purification quality. New water contamination sensor technology will help satisfy demand for water quality monitoring ("smart monitoring") systems in developed countries. As water recycling is considered to be the most appropriate solution in water scarce regions (such as the Middle East), new effective and stable membranes are required to purify wastewater.
Another promising sector within the water industry is oil-water separation, largely lead by stricter regulation of water injected into wells (zero-discharge for some regions). Effective separators and new chemicals are highly welcome in this area. Finally, water purification based on renewable energy (such as solar-based evaporators) is one of the most promising solutions for developing countries (especially within clean-water scarce African countries), where construction of large scale water purification plants are economically inefficient.
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