I've worked with technology companies for many years. It is just a fact of life that a substantial number of them don't make it, promising or not. It is also a fact that hindsight is 20/20 when it comes to investing in disruptive technologies. But full-disclosure: I support government investment in research and development of new technologies and believe life as we know it would be very different if the government were not in the business of nurturing inventors.
The failure of Solyndra (even if predictable) is clearly disappointing and doubtless represents at least a temporary PR blow to the industry. But let's be clear: the industry has made great strides during the hardest economic times we've ever seen.
Getting back on topic, this entry is not intended to comment on the relative merits or demerits of Solyndra's business plan or the federal government's decision to extend a loan guarantee to the now bankrupt company. The purpose is just to clarify one small point.
In a Bloomberg column yesterday, William D. Cohan, writing about the prospectus Solyndra filed with the SEC in connection with its anticipated IPO, noted:
"What was atypical was that the amended filing also contained a “going concern” qualification from the company’s auditors, PricewaterhouseCoopers. “There can be no assurance that, in the event the Company requires additional financing, such financing will be available on terms which are favorable or at all,” according to the amended S-1. “Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending or to remain in compliance with the covenants contained in the DOE guaranteed loan facility or the Argonaut revolving credit facility, could have a material adverse effect on the Company’s ability to achieve its intended business objectives and continue as a going concern.""
Dire sounding risk factors are the bread and butter of every prospectus ever written. Many technology businesses that go public are highly risky, whether it's because they are introducing "disruptive technology," have an unproven business model, don't have a long operating history, or are just subject to the turmoils of difficult economic times like almost all other businesses.
My point isn't to say Solyndra was a "good bet." (For the record, I was a Solyndra skeptic.) My point is just to say that the inclusion of a long list of scary sounding risk factors in an S-1 does not count as any kind of proof that the folks at DOE "should have known" that the company was a bad bet.
