In a press statement late Wednesday, The U.S. Treasury Department revealed that it sold 358.5 million shares of GM, raising $11.8 billion, and hanging onto a 37% stake of the company. With underwriters chomping at the bit to buy more GM shares to cover over-allotments, the Treasury could reduce its stake to 33.3% and sell 412 million* GM shares raising a total of $13.6 billion.

The L.A. Times reports that the GM IPO would set a new record:

A $23.1 billion total would surpass not only the record set by the Agricultural Bank of China but also easily break the $19.7 billion record for a U.S. company, set by Visa Inc. in March 2008. However, Visa’s deal was all common stock, leaving it as the largest by that measure.

In other company news, GM unveiled its 2011 Chevrolet Camaro Convertible at the Los Angeles auto show today. Earlier in the week its new, electric vehicle (EV) the 2011 Chevy Volt won the title of car of the year from two trade magazines, Motor Trend, and Automobile magazine.

The Volt is not a pure EV because it has a 1.4 liter gasoline engine-and-generator that produces power and gives mechanical assistance to the motor that drives the car. The gas engine assists the vehicle in situations where a driver has gone more than 40 miles, and is operating at highway speeds around 70 miles per hour company representatives have told several media outlets. That said, the Volt still qualifies for government tax credits provided to EV-buyers, and primarily runs on electricity.

GM reported its 2010 third quarter earnings last week including a net income of $2 billion, and revenue of $34.1 billion. By comparison, Tesla Motors, a Nasdaq-traded company that makes truly all-electric vehicles saw $31.2 million in revenue, but a net loss for the third quarter of 2010 thanks to hefty research and development costs according to its earning reports. Shares in Tesla Motors traded just under $30 ahead of the GM public offering.

*[CORRECTION: In the second paragraph of this story, I mistakenly wrote "more" shares, but should have written 412 million total. The word "more" was removed from the passage on Nov. 18 to correct the story. Thanks to @pbones for bringing this to my attention. - LK]

2011 Chevy Volt Image courtesy of (c) GM Corp.

Advocates for environmentally sustainable business are having a rough week. Two products beloved by the movement, the Tesla Motors Roadster, an all-electric vehicle, and PepsiCo Frito-Lay’s SunChips, the snacks sold in biodegradable bags, are suffering setbacks.

Tesla voluntarily recalled Roadster models 2.0 and 2.5 when the company heard from a customer with this problem:

[A] low voltage auxiliary cable in [the] vehicle chafed against the edge of a carbon fiber panel in the vehicle causing a short, smoke and possible fire behind the right front headlamp of the vehicle. This issue [involved the] 12V low voltage auxiliary cable and… not the main battery pack or main power system.

Tesla’s stock price, which remained steady immediately after the Oct. 1st recall, dipped more than 3% within the week as media and industry analysts discussed the Tesla Roadsters’ fire risk along with the company’s looming expenses and competitive outlook.

Tesla’s chief executive Elon Musk will soon have to cut checks for: recruiters to bring in hundreds of new engineers and their salaries; continued work on a new, Model S sedan; and production of new vehicles along with fixes for the recalled Roadsters, which numbered fewer than 500 vehicles.

Skeptics worry about how long it will take Tesla to generate more money than it spends on all of this in the name of the environmentally sound but still sweet ride.

Challenges to Tesla in the market are also varied, including other electric vehicles like the Nissan Leaf, and hybrids like the Porsche Cayenne S Hybrid.

Shortly after the smokey Roadster recall, PepsiCo Frito-Lay announced it would scale back the use of plant-based, biodegradable plastic packaging for SunChips due to complaints about the bags making noise.

All but one of the flavors of SunChips will now be sold in “traditional” plastic sacks instead of the non-petroleum, compostable stuff. That’s at least until the company comes up with or purchases another green alternative.

Back in April 2009, when Sun Chips introduced the biodegradable bags, the company ran extensive print, TV and digital advertising touting the green initiative (as MediaPost reported then). Now, PepsiCo Frito-Lay seems to blame the bags’ noise for the widely reported 11% sales decline in SunChips over the last 52 weeks.

Alexis Madrigal, a writer for The Atlantic went so far as to lament how much capital, human and otherwise, was invested in the SunChips sustainable packaging effort in the first place:

This is where we put our productive talents to work…The great machinery induced by billion dollar markets for everything (anything) can be reconfigured for any purpose, even something as mind numbing as flexible, lightweight chip containers.

Typical “flexible, lightweight chip container” materials — namely petroleum-based plastics — represent some 8% of the nation’s waste stream according to the U.S. Environmental Protection Agency.

Other writers suggested that consumers should have tolerated the noise or poured their chips in a bowl if the idea of keeping petroleum-based (and quieter) plastics out of the waste stream mattered to them, really.

Will PepsiCo’s investors feel good about the company ditching the sad sacks in response to customers’ demands, or will they be inspired by the fact that PepsiCo Frito-Lay tried to actually do something game changing in the first place? Its stock price was dipping at the opening of the market on Thursday Oct. 7th following widespread media discussion about the bags. PepsiCo is, unlike Tesla Motors, such a massive global food and beverage business there’s a chance that SunChips’ sales didn’t even move the needle for investors.

Environmentalists will be watching both brands, hoping for improved sales and stock prices, and case studies that prove sustainable business can also be profitable and competitive, and these setbacks were just a price paid by pioneers.

According to an Ernst & Young analysis based on data from Dow Jones VentureSource, venture capital investment in US-based cleantech companies hit $1.5 billion for the second quarter, in 68 financing rounds. That translates to an increase of 63.8 percent in capital and a 4.6 percent increase in deals compared to the same period last year.

The $1.5 billion mark also means the highest level of venture funding for the cleantech industry was reached since the third quarter of 2008 (i.e. two years ago).

Globally, market research firm Cleantech Group and Deloitte recently pegged total cleantech venture investments to total $2.02 billion across 140 companies.

According to Ernst & Young, later stage venture financings were the main driver of investment growth in the United States for Q2 2010, with $891 million invested in 33 deals, and later stage deals accounting for 59% of total funding in the quarter. Compared to Q2 2009, later stage activity rose an impressive 83.3% in terms of deals and 143% in terms of dollars.

Noteworthy: the top 10 deals alone accounted for nearly $1 billion or two thirds of total funding for Q2 2010 ($993 million to be exact).

One investment deal closed in the second quarter that helped boost US cleantech investments to its highest level in 2 years a great deal was the $350 million injection into Better Place.

Tesla Motors was also in the spotlight in Q2 as it completed an IPO and then received a $50 million strategic investment from Toyota to jointly develop electric vehicles.

Five of the top 10 VC deals in Q2 2010 were in the solar segment, which received $438.8 million, an increase of 182.6 percent compared to Q2 2009. Following solar, the biofuels segment also received significant VC investments in Q2 2010 with $265.7 million, an increase of 517.2 percent compared to the same period last year.

SolarCity today announced that it is taking a $21.5 million round of funding led by Mayfield Fund, and the company’s previous investors Draper Fisher Jurvetson, DBL Investors and Generation Capital. The company’s prior funding totaled approximately $134 million, and included investors First Solar, JP Morgan and Elon Musk.

SolarCity helps businesses, home owners and government agencies adopt solar power and save money using clean energy versus electricity generated from non-renewables. It designs, installs and provides finance options for the development of solar projects. In 2008, it provided and installed the thousands of solar panels that grace the roof of eBay Inc.’s green building (pictured) in San Jose.

Earlier this week, SolarCity signed a new partnership deal with Rabobank, the international private bank with a triple A credit rating. The bank has agreed to provide solar project financing for its commercial clients via SolarCity. Rabobank N.A. in California also installed solar power generating rooftops at six of its retail locations.

The shiny new Rabobank-SolarCity rooftops provide power not just for the banks themselves, but for customers of another Elon Musk concern — Tesla Motors. AutoBlogGreen gushes that any of Tesla’s electric vehicles making a pit stop along California’s “clean corridor,” or Highway 101 Rabobank locations can get recharged renewably.

SolarCity plans to use its latest round of venture funding to expand into new geographic markets, and entertain acquisitions. Its solar projects, so far, are in five states: Arizona, California, Colorado, Oregon and Texas.

In California and Arizona, SolarCity faces direct competition from SunRun, another venture-backed firm with investments totaling about $140 million, with its most recent round led by Sequoia Capital.

Valleywag’s Owen Thomas, now writing for VentureBeat, has for some reason become fascinated with Musk’s personal life and continues to write about the man’s marital woes. He’s called Musk a liar on multiple occasions and seems delighted to get into the sordid details of Musk’s divorce. Musk wrote his side of things on the Huffington Post. Thomas hit him again.

Musk is now responding yet again, below. What bothers me about this exchange is that Silicon Valley press, VentureBeat in particular, is so focused on an entrepreneur’s personal life. A divorce isn’t anything that our readers want to know about. This isn’t Hollywood and these individuals aren’t out there trying to get lots of press about their personal lives. If they were, they’d hire agents and publicists and make the best of it. Instead they are focused on imagining and building the future. There’s no place in our community for these kinds of attacks. VentureBeat should apologize and move on, and let Tesla continue to disrupt the car industry.

Below is Musk’s response:

Why Owen Thomas is Silicon Valley’s Jayson Blair

The latest article by Owen Thomas, “Tesla CEO can’t handle the truth”, continues his damaging and fraudulent crusade against Tesla and me personally. Tesla has received a great deal of press, both positive and negative, but it is amazing how much of the truly negative press can be traced directly back to one man.

Despite numerous successes at both Tesla and SpaceX, Thomas has never once written a positive article about either company. Every one of the dozens of stories he has written – without a single exception – has been a nasty hit piece. Even if all those stories were factually correct, and they certainly were not, he has still fundamentally misled the public about my companies by failing to provide even a token number of positive articles. Lying by omission is still lying.

Responding below under similar headings Thomas uses in his article, I address the inaccuracies in his latest article, where he again lies with great conviction. It is impossible to stop Owen from continuing to write such erroneous garbage, but, as I do not have the time or inclination to refute all bad reporting on his part, I would like it known that nothing he writes is remotely objective. Any future articles written by Owen Thomas should be viewed with this in mind.

Tesla IPO Filings

Thomas says “Tesla updated its IPO filings to acknowledge substantially all of the concerns we [ie Owen Thomas] raised as potential risk factors investors should consider”.

We updated our IPO filings simply to state that what Thomas had written had no basis in fact. Since Tesla was in the IPO quiet period, we could not respond directly with a press release. Instead, we had to update the IPO documents to assure investors that what Thomas had stated about Tesla being reliant on me for funding or there being a DOE loan default risk related to my divorce were both false.

Even without the IPO proceeds, Tesla has enough funding from its many venture investors, Daimler and the DOE to complete the Model S with no financial help from me. The reason for the IPO was to provide cash for additional new developments and a small percentage of liquidity for long time shareholders, including me (I sold 5% of my holdings). If this had been a real issue, it would have been placed in the IPO prospectus by the bankers and lawyers long before Owen Thomas raised it.

This is one of many situations where he created a real problem for Tesla out of thin air by writing a misleading article.

My Personal Spending

In his section entitled “Musk’s personal spending”, Thomas does some creative math to claim that one of my “whoppers” is that I suggest I’m spending $30k per month, excluding legal fees. This is completely made up. I never state that anywhere in my piece, nor can it be computed from a collection of my other statements.

Thomas intentionally conflates a statement I make about the average of what I’ve been forced to spend on divorce lawyers over the past two years and my household expenses last year, ignoring the fact that a huge portion of the legal expenses occurred this year in the run up to trial.

Founding of Tesla Motors

Here Thomas relates an anecdote about a serious issue Tesla had with Martin Eberhard, one of the cofounders of the company. Eberhard filed a lawsuit against Tesla (and me) that was filled with inaccuracies.

Tesla was going to file a counter suit, but before we filed, Eberhard and I settled our differences with a few hours of mediation. I’m glad that we made peace. The result obviously satisfied both Eberhard and me or it wouldn’t have been settled. However, Thomas quotes Eberhard’s lawyer as though this was a one sided victory. He could just as easily have quoted my lawyer who would have made the same statement.

What Thomas forgets to mention is that Eberhard was forced to withdraw his lawsuit weeks before the mediation even began. If Eberhard’s position had been strong, he would not have had to withdraw his claims unilaterally well before mediation started.

The Safety of Customer Deposits

Thomas states that I both told customers that I would personally back their vehicle deposits and that I said their deposits were at risk. He is again intentionally conflating facts to make it sound as though I had contradicted myself.

Here is how Owen Thomas once again misleads the reader: the statements are actually referring to different vehicles at very different stages of maturity, but he pulls each quote out of context and pretends they refer to the same thing. When I said that I would back customer deposits personally, which I did directly to customers on several occasions as well as in a Car & Driver article, that was clearly and explicitly regarding the Roadster.

I knew that my resources, combined with Tesla’s, would be enough to pay them back personally if need be. Moreover, Tesla had not been sufficiently clear with customers in the early days that the Roadster deposits were at risk. It would not be right for customers to have those funds at risk without their explicit consent.

On the other hand, the statement I made to Claire Cain Miller of the New York Times at the Model S launch specifically and clearly referred to the Model S reservations. I knew that my and Tesla’s resources could not also cover the Model S deposits in a worst case situation. However, unlike with Roadster, we were very explicit that Model S reservation dollars were at risk and that the funds would be put to use doing advance development of the vehicle.

In this section, Thomas also says that I announced that a Tesla financing round had closed in November 2008, when it actually closed in March 2009. Whether intentionally or not, he is getting the dates confused between when the financing round documents were signed (representing firm commitments), which was actually December 2008, and when the last of the cash was wired in, which was March 2009. This is common in complex financial rounds with a large number of participants.

My History as an Entrepreneur

In this section, Thomas casts aspersions on both Zip2 and PayPal, my first two companies, talking about management changes that occurred at both and not acknowledging one positive thing about either company. The reality is that Zip2 (which I started at age 23) sold for over $300M to Compaq and PayPal sold to eBay for over $1.5B after going public. Anyone reading Thomas’s twisted account of their history without knowing better would think that both were failures.

It is worth noting that of the five companies that I’ve been a key part of creating (Zip2, PayPal, SpaceX, Tesla and SolarCity) over the past fifteen years, every round at every company has been an up round, even in the worst of all market conditions. In other words, no matter whether you were a series A, B, C, D, etc investor, you always made money. With a public company, there are of course significant short term fluctuations in share price, but those investors that believe in a long term hold strategy should be comforted by this track record.

Thomas also falsely states that I’m alienated from the rest of the management team at PayPal and have a completely different version of history to them. In reality, Peter Thiel, who replaced me as CEO of PayPal, later became one of the biggest investors in SpaceX. Max Levchin (PayPal CTO), Peter Thiel, David Sacks (PayPal COO) and I produced a movie together soon after we worked together at PayPal. There are half a dozen other ventures involving me and several other members of the PayPal management team.

Tesla’s Investors

Thomas references another NY Times Miller article about an email I wrote to customers and claims I said Tesla would start getting DOE funds in four to five months.

What I actually said was that the DOE had told me to expect funds disbursement in four to five months. This was absolutely true. In the end, it took the DOE six months longer than they themselves expected, since the ATVM loan program was brand new.

In any event, Thomas bizarrely manages to create a fake negative story out of what was actually a huge victory for Tesla. We were selected as the first winners of the Advanced Technology Vehicle Manufacturing program, along with Ford and Nissan. One of the requirements of this program was that you had to demonstrate that you were a viable ongoing business and that you had a compelling technology and business model for the funds sought.

This is completely different from the auto bailout program for GM and Chrysler, although many in the media confused the programs. In fact, the reason that GM and Chrysler were excluded from the ATVM program, is that they were going through bankruptcy and therefore obviously failed the requirement to have a viable ongoing business.

Thomas falsely states that Tesla wasn’t profitable last year, even though I said it would be. In fact, Tesla was profitable in 2009, albeit only for the month of July. That’s the best we could do, given the ramp up in Model S expenses, but nonetheless it was an important symbolic victory. If all Tesla did was focus on being a small sports car company and sell powertrain technology, it would still be profitable today, as both businesses generate a good margin.

However, my goal from the beginning has been to make electric cars that anyone can afford (Model S is step two in that process, not the end game), which requires a huge expansion in production. We are trying to go from about 500 Roadsters per year to 20,000 Model S vehicles. In other words, production is intended to be 4,000% of what it is today in only a few years time. There is just no way to remain profitable with that level of growth and capital expenditure.

Regarding Car & Driver quoting me as saying that GE would be an investor, that was an error on my part that was corrected as soon as C&D published. The C&D interview occurred a few months earlier when GE had confirmed via email that they would be investing. Then GE had some sort of internal crisis and pulled out at the thirteenth hour (they had asked us to extend the closing deadline to allow them to participate), which was unfortunate for them. Their investment would have done incredibly well.

Thomas pointedly ignores actual Tesla investors. In addition to the excellent venture investors of Valor Equity, DFJ, Technology Partners and others, there is Daimler and Toyota. Daimler invested $50M in Tesla after working with us for a year on the electric Smart car and doing extremely detailed technical and financial due diligence. When we did another investment round late last year with ADWEA and Fjord Capital, they invested again. When we did the IPO, they didn’t sell a single share, despite having a roughly threefold return on investment.

The Toyota Deal

Thomas states that although Toyota and Tesla announced that they would be developing a vehicle together, the SEC filings done right after the press conference say that we have no written agreement and there is no guarantee that we will get one done. Therefore, he concludes that I (and presumably Akio Toyoda), were misleading the public at the press conference!

Thomas actually knows better, but, for those who aren’t familiar with the requirements of an IPO prospectus (aka S-1), you always have to state the worst case scenario. This is done for liability protection, but is definitely not what is actually expected to occur.

Anyone who thinks that Akio Toyoda, the president of Toyota, would give a major public speech in front of the governor of California about doing a joint electric vehicle project with Tesla and not follow through is a complete fool. As was announced last week in Japan by Toyota, we have now signed the agreement and will be delivering the first prototypes this month. The vehicle and details of the program will be unveiled at another event later this year.

Despite Toyota’s recent troubles, they are still the largest car company in the world and by far the leader in hybrid electric vehicles. For them to have invested in Tesla, (moreover at the IPO price) and want to partner with us to produce a vehicle is a great honor and a powerful endorsement.

Purchasing the NUMMI plant for $42M, which has the ability to manufacture half a million vehicles per year or almost 1% of global automotive production, and making that our Tesla factory is another valuable element of the relationship. I should mention that NUMMI was owned half by Toyota and half by the General Motors spinoff (Motors Liquidation Corp), so we owe them a debt of appreciation too.

The main reason I love this factory is that it accelerates our ability to produce an affordable mass market car. The Model S platform will at most consume 50k to 100k of the NUMMI capacity. The remainder of the plant will be sectioned off until we can bring our high volume affordable electric car to market, which has always been my dream for Tesla.

One day before its scheduled IPO, Tesla Motors is increasing the allotment of shares that will be sold to the public from 11.1 million to 13.3 million, according to an amendment to its S1 filing. The additional shares are being sold by existing shareholders looking to cash out at the IPO, including Tesla founder and CEO Elon Musk who is selling an additional 909,212 of his personal shares. Other selling stockholders include VantagePoint Venture Partners (238,748 shares), Bay Area Equity Fund (88,586), Westly Capital Partners (72,625), Compass Venture Partners (22,931), as well as friends and family like Elon’s brother (and OneRiot CEO) Kimball Musk (12,692). Tesla itself won’t make any additional money from the bump in shares, but more shares will be available to the public.

If Tesla shares open at the high end of its expected range of $14 to $16, the Silicon Valley electric car company will debut with a $1.5 billion market cap (based on 93.5 million total shares outstanding after the IPO and a concurrent $50 million private placement with Toyota). After the offering, Tesla’s largest shareholder will still be founder Elon Musk, who will own 28.4 percent of the company (worth $426 million at that valuation, versus a potential windfall of $14.5 million for the shares he is selling). The second largest shareholder will be Daimler (through an investment arm called Blackstar Investco) with 8 percent of the shares, and the third largest will be the government of Abu Dhabi (through Al Wahada Capital Investment) with 7.8 percent of the shares. The two biggest VC shareholders will be Vantage Capital Partners with 6.6 percent and Valor Equity Partners with 5.25 percent.

It takes a ton of money to crack into the car business. Even before the IPO proceeds, Tesla has already raised $783 million in venture capital and government loans. Tesla is expecting to raise about $210 million in the IPO, bringing the total raised to just over $1 billion.

And so far the company isn’t making any money. Last year, Tesla lost $56 million on revenues of $112 million. In the March quarter of 2010, it lost $29.5 million on revenues of $20.8 million. As of March 31, 2010, the company still had $188 million in cash. But it expects to spend up to $125 million this year, as it gears up to manufacture its Model S sedan (including $42 million to buy a factory in Fremont, California formerly operated by Toyota and GM).

While Tesla is known for its sexy roadster, it the Model S which will make or break the company. It is a more affordable electric sedan which the company hopes will start to make inroads with the general car-buying public.

A small Cessna twin-engine plane crashed in East Palo Alto today, killing three Tesla Motors employees and taking out power in parts of the city. The plane took off from Palo Alto airport and reportedly hit some electrical lines. The names of those who were on board have not been released. The plane was registered to Doug Bourn, a senior engineer at Tesla. It is not clear if he was the “high ranking official at Tesla” piloting the plane or if he was even on it.

Nobody on the ground was injured, but two homes caught on fire, including one used as a day care center. Fortunately, the day care center was empty at the time of the crash.

Eric Savitz at Barron’s has been blogging updates about the accident all day. It appears to be responsible for a widespread power outage in Palo Alto, which affected Facebook’s offices and many startups. For example, power is still out at TechCrunch HQ in Palo Alto (although our site is still up because our servers are not there).

The plane was headed to Los Angeles and was an older Cessna 310 manufactured in 1976.

Update: Tesla sent us the following statement from CEO Elon Musk: “Three Tesla employees were on board a plane that crashed in East Palo Alto early this morning. We are withholding their identities as we work with the relevant authorities to notify the families. Our thoughts and prayers are with them. Tesla is a small, tightly-knit company, and this is a tragic day for us.”

Last month SecondMarket published data on private company stock sales that they helped complete in 2009. They’ve now released last month’s data as well.

A total of a little more than $13 million in sales occurred, with the average transaction size of around $2 million. There continues to be very strong demand for consumer products and services startups (which includes companies like Facebook, Twitter, LinkedIn, Digg, etc.). But the sellers are spread out more evenly across all categories, particularly consumer, IT, Healthcare, energy and cleantech.

36% of the transactions were sales of Facebook stock, and we’ve heard from independent sources that sales are being completed for as high as $40 per share (or a $17.6 billion valuation). That’s a substantial price increase from less than a month ago. Tesla took 29% of the transactions, and sales of Solyndra stock were 28% of the total. Gridpoint rounded the group out with 7% of the total.

The complete report is below, and you can download the pdf here.

Passin has 23 years of international automotive experience under his belt, most recently serving as general manager of production engineering for Toyota in North America.

Previously, Passin was vice president of manufacturing at Toyota’s plant in Cambridge, Ontario, which produces over 200,000 automobiles per year.

Passin regards his jump as a ‘once-in-a-lifetime opportunity’.

In a statement, Tesla CEO Elon Musk said Passin’s recruitment fits in the company’s plans to significantly ramp up its production capacity (at present, it has produced some 1,000 cars), particularly with respect to the planned Model S sedan. Musk added that his new VP will also help recruit new employees for Tesla’s California manufacturing team.

(Via press release)

Most companies don’t like SecondMarket one bit, at least at first blush. Companies don’t want random outsiders holding their stock before they’re public. And they don’t like some employees having liquidity events before others, it tends to screw around with morale. And there are also legal and tax issues. Stock options must be priced at “fair market value” or both the employee and company face tax consequences. The board of directors usually sets the common stock price at a fraction of the preferred price. But when there are verified third party purchases on places like SecondMarket, the companies have to use those sales as a guide. The result is higher priced options for all employees.

But we’ve seen a big evolution in startup stock dynamics over the last year. Companies like Facebook and Zynga have created controlled secondary markets for their employees to sell stock, generally at around 65% of the preferred price. Yelp seems to be doing the same. Giving employees a way to “take some money off the table” isn’t such a bad thing after all. Think of it as releasing some of the steam in the pressure cooker.

So about that data.

Second Market says that just over $15 million in transactions were closed through them in December 2009. The top company was Solyndra, with 38% of the transactions, followed by Facebook with 31%. Ebags was next with 13%. LinkedIn, Zynga and Tesla Motors each took 6% of the total. In all, half of the transactions were for “consumer products and services,” which includes website services like Facebook. Alternative Energy/Clean Tech took 44%, and software took just 6%.

The vast majority of completed transactions were for later stage companies that have raised at least three rounds of capital.

64% of transactions were for startups based in California, followed by New York (10%) and Boston (3%).

Part of the sky-high price around consumer website stocks like Facebook and Twitter is due to an imbalance of demand and supply. 70% of buyer demand is around those stocks, but just 20% of the overall supply is. Employees from a wide variety of startups want to sell their stock, but most of the demand is for the hot Internet stuff, and Tesla (which has 5% of demand).

It’s been a long drought for IPOs, but venture capitalists and tech entrepreneurs are hopeful that 2010 will be the year they rain down on the Valley once gain. Earlier this year, a handful of IPOs trickled out, such as OpenTable, Rackspace, and A123Systems. But what people are really waiting for is another Netscape moment—an iconic IPO which will whet investor’s appetites and open the floodgates for others to follow.

Below is our list of the top ten IPO candidates for 2010 in the technology industry (and, no, it doesn’t include Twitter). I conducted an informal survey of some top VCs and angel investors. These are the names whispered about the most in the Valley and other tech circles. The hope is that the economy will swing back and the public markets will become receptive to IPOs, especially towards the second half of the year.  The stock market in general is finding its legs already.  The S&P 500 is up 24 percent this year. If the bull market continues, that will be good for the prospects of seeing these potential IPOs.  And if it doesn’t, there’s always M&A.

1. Facebook. Total raised: $716 million.

If there is one company which everyone is looking towards for a new Netscape moment, it is Facebook.  The company can pretty much go public any time it wants.  It is already the fourth largest site in the U.S. and the world.  Its last private common stock sale valued the company at $11 billion, which may or may not be rational.  The key to a large public valuation will be whether Facebook can figure out how to turn all of that attention into advertising dollars.  So far it is said to be on track to beat its $550 million revenue projections from earlier this year.  A Facebook IPO would certainly create a halo effect for other tech offerings.  Even if it doesn’t go out in 2010, the prospect that it might could still help other companies go public as hungry investors grab what they can get.

2. Zynga. Total raised: $219 million.

Social game developer Zynga is on a tear, with more than 230 million people a month actively playing its games such as FarmVille, PetVille, and Texas HoldeEm Poker.  The company just raised a whopping $180 million round.  It is believed to be Facebook’s largest advertiser and pulling in at least $250 million in revenues on its own.  But it is also at the center of the Scamville controversy over how it makes some of its money from scammy offers.  If it can convince investors it has cleaned up its act, they will gobble up an IPO.

3. LinkedIn. Total raised: $103 million.

The other social network, LinkedIn is like the enterprise version of Facebook. It is where business gets done and people find jobs.  LAst year alone it raised about $75 million at a $1 billion valuation. Founder Reid Hoffman has spoken repeatedly about LinkedIn’s ability  to IPO.  Earlier this year, he recruited former Yahoo exec Jeff Weiner to be CEO and is spending more time himself as a venture capitalist, which has always been his sideline.

4. Glam Media. Total raised: $125 million.

Glam Media is one of the fastest growing ad networks and collection of fashion- and women-oriented sites.  At a time when traditional media and women’s magazines are suffering, Glam is saw display advertising revenues across its network up more than 50 percent in 2009.  CEO Samir Arora expects the company to be profitable in the fourth quarter, and is recruiting executives with big-company experience.  Ad networks which dominate their niche are an easy lay-up for investors.

5. Demand Media. Total raised: $355 million.

Demand Media is another LA-based company, started by former MySpace chairman Richard Rosenblatt.  Demand Media owns a collection of sites such as eHow, Livestrong, and countless niche sites.  It also owns domain name registrar eNom, which generates a lot of its cash.  Demand Media is a content mill, churning out articles and videos for its niche sites like Golflink.com and Trails.com  cheaply and quickly in response to what people are searching for.  It may not be sexy, but it is lucrative enough that potential acquirers are sniffing around and AOL’s Tim Armstrong is looking to copy and improve on the niche content model.

6. Gilt Groupe. Total raised: $48 million.

Gilt is a private online shopping club for luxury goods.  Its revenues are reportedly around $200 million this year, and expected to more than double next year.  IPO talk is already in the air.  Gilt’s counterpart in Europe, Ventee-Privée, is rumored to be in acquisition talks with Amazon for around $3 billion.  And Kleiner Perkins just invested in One Kings Lane, another private shopping club based in England.

7. Etsy. Total raised: $31.6 million.

Another niche e-commerce play could be Etsy, the Brooklyn-based marketplace for handcrafted goods.  Sellers on Etsy are on track to trade $200 million worth of goods on the maretplace this year, double from last year.  Founder Rob Kalin recently took over again as CEO and says the company is now profitable.  Etsy will never be as big as eBay, but its focus means that can become a the alternative eBay for buyers and sellers of high-quality, custom-designed apparel, furniture, and other goods.

8. Yelp. Total raised: $31 million.

Yelp was nearly acquired by Google for around $500 million before the deal broke down last week.  The fast-rising local reviews site now might try the public markets instead.  The company already has 300 employees and is becoming a powerhouse in the online advertising for local businesses, which is an area of growth every major Web company wants to participate in.  Already the IPO filings are starting to come in, with ReachLocal filing to raise $100 million for its local ad network.

9. Tesla Motors Total raised: $783 million.

Why would you invest in GM IPO if you could invest in Tesla instead?  Silicon Valley’s electric car company is expected to hit the public markets.  Building a car company takes massive amounts of capital, and Tesla has raised nearly $800 million so far.  Most of that comes in the form of government loans, such as the $465 million it received as part of the government’s $25 billion bailout of the U.S. auto industry.  A lot of the capital also comes from partner Daimler, and billionaire founder Elon Musk.  But, hey, at least Tesla is profitable, which is saying a lot for a car maker.

10. Skype Total raised: $69 million

Despite all the drama surrounding eBay’s recent sale of Skype to a group of private investors including Silver Lake Partners and Andreessen Horowitz for $2.75 billion, the deal got done.  Skype is already a major Internet brand, with more than 500 million users of its Internet calling, IM, and video communications service, and $185 million in quarterly revenues.  Before eBay found its buyers, it was very publicly pursuing the IPO route.  And given that eBay retains a 30 percent stake in Skype, that is still an option if its growth continues apace.

Runner’s Up:  The ten names above are the most likely to go public if the markets open up.  Other companies which might tap the public markets include Associated Content, Brightcove, Digg, StumbleUpon, LiveOps, Workday, MerchantCircle, ExactTarget, Chegg, and Rearden Commerce.  Most informed observers do not expect a Twitter IPO next year.  It is too early.  The company just raised $100 million, and still needs to figures out its business model.  Maybe in 2011.

Which of these companies do you think is most likely to IPO?  Which ones would you invest in?

Photo credit: Flickr/David Paul Ohmer

Tesla Motors is planning an IPO soon according to a Reuter’s report. However at this point it’s still not clear when that will be although the company had previously stated it won’t happen in 2009. In fact, this rumor has been around for sometime, but in case you didn’t notice, the stock market wasn’t doing that well until recently.

Tesla has been ramping up development of its all-electric Model S sports sedan and building selling Tesla Roadsters as quick as they can make ‘em. Of course the $597.5 million in funding that the company raised this year probably helps.

The bulk of that cash influx, $495 million, came from a Department of Energy loan. Daimler also came through with $50 million in exchange for 10% ownership of the young startup, while another round of funding earned Tesla $82.5 from Daimler, Fjord Capital Partners, Aabar and other undisclosed investors.

A Tesla spokesman dismissed the report as a “rumor or speculation” which very well could be the case. But if the company keeps on the its current path, whenever the IPO does happen, the company will probably not have any trouble finding investors.

Remember that whole sour grapes law suit filed against Tesla Motors and Elon Musk by co-founder and former CEO Martin Eberhard? According to Eberhard’s lawyer, he has dropped the suit but doesn’t give any clarification as to why Eberhard dismissed the legal action, according to the San Jose Business Journal.

We reported earlier this summer that Eberhard filed a lawsuit against Tesla and Tesla CEO Elon Musk, citing allegations of slander, libel and breach of contract. Eberhard made many outrageous accusations, alleging that Musk “compromised Tesla Motors’ financial health.” Eberhard also said that Musk began a smear campaign against Eberhard on media outlets, accusing Musk of pushing him out of the company that he founded and taking full credit for developing the first electric car the company produced, the Roadster. Eberhard also claimed that Musk not only falsely said that he was the founder of the company, but has also misrepresented his past roles, including the extent of his involvement with the company he founded, PayPal.

Tesla immediately issued a short statement when the lawsuit was filed, calling the lawsuit a “fictionalized account of Tesla’s early years.” Musk then took to Tesla’s blog to give his own lengthy and in-depth version of the messy situation, defending his education and past professional roles and his role as CEO of Tesla.

According to reports, a judge recently ruled that the lawsuit could move forward after Tesla filed a motion to dismiss in late June. Apart from the lawsuit debacle, this summer has proved to be a positive one for Tesla, which achieved profitability in July with approximately $1 million of earnings on revenue of $20 million, thanks to improved margins on its sports car, the Roadster. Tesla Motors also recently announced that the company will build a powertrain assembly facility in Palo Alto, which will also house the corporate headquarters, engineering and R&D departments.

Silicon Valley’s electric car company, Tesla Motors, says that it hit profitability in July. The private company reports that it made “approximately $1 million of earnings” on revenues of $20 million, and that it shipped 109 Roadsters, its $109,000 all-electric sports car. The revenues reflect GAAP accounting standards and are only for the month of July.

Founder and CEO Elon Musk predicted in June that the company would soon hit profitability at the end of a lengthy blog post dealing primarily with a lawsuit brought on by Tesla’s ousted co-founder Martin Eberhard. In June, Tesla was also awarded a $465 million loan from the Department of Energy, which will help it manufacture its more reasonably priced Modern S sedan.

The $20 million in revenues and $1 million in profits do not reflect any proceeds from that loan, the company tells us.

The company says that the first Roadsters will be delivered to European buyers this summer. At least three Tesla buyers have exported their cars to Europe already, though (one each to Germany, Norway and Spain).

The company, which is now more valuable than General Motors, recently unveiled its second model, the Model S.

The company also says that it’s looking for showroom locations in Washington DC and Toronto.

Silicon Valley electric car manufacturer Tesla Motors got another shot in the arm today from German auto giant Daimler, which took a 10 percent stake in the company and expanded its partnership with Tesla to equip future Mercedes-Benz vehicles with electric lithium-ion batteries. Mercedes has been testing Tesla’s batteries in a fleet of 100 smart cars, and is already moving into limited production. But with this agreement, Mercedes now expects to roll out its first battery-powered Mercedes-Benz in 2010, and offer battery-powered vehicles for all of its models by 2012.

The amount invested was not disclosed, but even more valuable to Tesla is the vote of confidence from one of the world’s leading auto companies. In a press release, Daimler proclaims: “Tesla is the only production automaker selling a highway capable electric vehicle in North America and Europe.”

The money will no doubt help as well, since Tesla still needs a few hundred million dollars to produce its own $50,000 Model S, which is half the price of its first car, the Tesla Roadster. The company is still applying for $450 million in government loans to get the Model S into production, but it looks like Mercedes will have at least its B-class cars on the road first.

But as I suggested a year ago, Tesla’s real business may be in supplying the electric drive trains for other vehicles. The Roadster and Model S might just turn out to be really expensive demos. In a TechCrunch poll I inserted into that post (and again below), 77 percent of you agreed. I wonder if Mercedes has an exclusive license to Tesla’s battery technology, at least for a few years. (Update: Tesla says there is no exclusivity. According to spokesperson Rachel Konrad, “This investment obviously establishes a very close relationship between the two companies, but Tesla still plans to continue with its strategy of growing its powertrain business through sales of EV components. This investment does not preclude Tesla from growing such relationships with other automotive OEMs.”)

What will be a bigger business for Tesla in five years?
( polls)

Mike and I were the first journalists to ride in the new Tesla Model S sedan yesterday and we were captivated by the massive 17-inch touch screen (so was Gizmodo) featured in the center console of the car. Both Tesla CEO Elon Musk and chief designer Franz von Holzhausen didn’t say much about the on screen system, except that it does have touch capability, it is an “entertainment center” and that it is a prototype which is still undergoing changes and improvements (see what both Musk and von Holzhausen said in our video).

Tesla says that 520 S Model all electric sedans have been reserved by customers in first week since it was announced. At that announcement, Tesla debuted the screen but it wasn’t much to look at (see right). Now it looks much better (Thanks to Nik_Nik for the picture above).

Here’s what we know about the screen. Its a 17-inch LCD touch computer screen that has 3G or wireless connectivity. When we were in the car, the screen featured Google Maps. Tesla’s website verifies that the screen will be able to feature sites like Google Maps and Pandora Music. From what we saw yesterday, the screen is divided vertically into three separate areas: the maps/navigation screen, radio/entertainment area, and climate controls. The navigation screen has several tabs: “internet,” “navigation,” “car,” “backup,” and “phone.” The entertainment section has several tabs, including “audio,” “media,” “streaming,” “playlists,” “artists” and “songs.” The climate controls seem pretty standard. Our driver (see video) says that the computer is going to be run on some kind of Google Maps software and will feature a “full browser.” It’s not surprising that Google Maps is integrated into the interface, Google co-founders Sergey Brin and Larry Page are investors in Tesla. The dashboard is also an LCD touch screen. Tesla has also confirmed to us that the computer/entertainment center will be Linux-based.

Here’s the video of both Musk and von Holzhausen talking about Tesla’s computer and footage of our driver revealing more about the technology:

PayPal cofounder, SpaceX Founer and Tesla CEO Elon Musk takes the stage today at the Web 2.0 Summit to talk with John Battelle.

What do space flights and electric cars have to do with Web 2.0? Absolutely nothing. Still, there will be lots to talk about. In September SpaceX put a Falcon rocket into Earth orbit, the first privately developed launch vehicle to reach earth orbit from the ground. More recently, his Tesla Motors has gone through layoffs and raised another $40 million, and Musk took over the CEO role. There have also been some spectacular Tesla crashes.

Our live notes of the interview are below:

Tesla:

Musk says they’ll be making 1,500 Tesla Roadsters a year at full productions. He says it’s faster than a Ferrari – 3.9 seconds 0-60, and more efficient than a Prius – about 130 MPG equivalent. There are 1,200 people on the waiting list.

The next product Tesla will launch is a sedan, the Model S, which will be unveiled in Q1 2009. It will be half the price of the $109k roadster. The third model will be a car that’s less than $30k, and they’ll create “hundreds of thousands” of them per year.

Battelle ask Musk about the recent layoffs, the funding and the CEO change. Musk says the last time there was a successful auto startup was Jeep in 1941. Building a car company is hard, he says, but that we can’t leave electric cars up to Detroit, because we’d be waiting too long.

Musk says they raised $40 million from existing investors instead of raising $100 million from new investors so that they’d maintain control of the company.

When Battelle asks why General Motors doesn’t buy Tesla, Musk responds “They can’t afford us.”

Solar City:

Musk says he spends very little time on Solar City, which provides solar panels to residential customers, and lets buyers get the panels with no down payments.

SpaceX:

Musk says the Internet, energy and space exploration are the key areas of exploration for humanity. SpaceX is now six years old and he started it from scratch.

Don’t pull the plug quite yet on Elon Musk’s electric sports car startup Tesla Motors. After laying off 18 percent of its workforce two weeks ago (69 people out of 384, we have confirmed with the company) and reportedly burning through all but $9 million in cash, Tesla is getting another lifeline in the form of a $40 million convertible. That is convertible as in debt, not convertible as in riding with the top down. Investors have now sunk $186 million into the company.

Add to that the tens of millions of dollars in deposits that Tesla has already collected for 1,200 vehicles (only 50 of which have been shipped). These are $110,000 machines, some of which already have been paid in full and others which have deposits on them ranging from $5,000 to $60,000.

Despite all of this cash coming in, Tesla was still dangerously close to running out of money. That is what is so alarming. Building a car is not cheap. But this is not a cheap car. Tesla still has 315 employees, and is building an automobile manufacturing plant in San Jose, California.

Elon Musk has taken over as CEO and the company’s next vehicle, a more modestly-priced sedan, is now on the back-burner. All efforts are now on getting as many of the sports roadsters out the door as possible at a profit, and licensing its electric-battery power train to other car companies such as Mercedes-Benz.

Will this $40 million infusion be enough to get Tesla to the finish line and profitability or will it run out of gas trying?

Tesla Motors has been hit hard with credit crunch of late, but the billionaire founder of Telsa and PayPal has personally guaranteed that all of the 1,200 battery-powered Tesla Roadster pre-orders will be filled.  So far, only 60 of the 1,200 cars have been delivered and the company seems to be consolidating after shutting down and laying off 90% of the Detroit, MI office. However, with this latest round of financing of $20 million and $200 million from a U.S. Department of Energy loan, the company hopes to be continue operations. Hopefully, operations will continue enough to not only build all the Roadster pre-orders but also the sexy BMW 5 series, sports-sedan Model S. recently announced. (Pictured above)