CTIQ spoke to a few of the investors who will be presenting at Greentech Media’s NextWave Cleantech Investing conference next Tuesday, Aug. 5, to get insight on key challenges they think the industry is facing and what issues they’ll be talking about. Judging from the agenda, with panels full of industry heavyweights, it promises to be a comprehensive look at where the sector is heading by discussing the role of non-VC investors moving forward, the future of the utility, resource efficient manufacturing, and the true impact of the cleanweb phenomenon.
Josh Green, Partner, Mohr Davidow Ventures: Cleantech Entrepreneurs Need to Be Re-categorized
In April, it was reported that Mohr Davidow was putting the stopper on its funding of clean technology and life sciences companies and instead focusing mainly on information technology startups. The shift also coincided with the start of a new $200 million fund raise.
Partner Josh Green’s talk at NextWave draws on Mohr Davidow’s investment change of heart. His presentation, titled “View from Sand Hill Road,” will give the industry a dose of reality but he promises to spend the majority of his speech focusing on the solutions, rather than the problems reported in the media.
One of the key problems with cleantech investing, he says, was that it was a “purpose driven” investment, which was unprecedented in Silicon Valley.
Another problem, according to Green, is the technologies themselves were grouped together, but really didn’t have anything in common (i.e. solar really has nothing in common with biofuel or energy efficiency.) He pointed out that the hope, initially, was that as these technologies mature, they would all separate into their own value chains.
Although very few people on Sand Hill Road identify themselves as a cleantech investor today, Green feels that the pendulum will swing back in a few years. He says that he plans to deliver a hopeful message for investors that focus on capital intensive areas and applied research during his speech.
In order to attract venture funding now, entrepreneurs need to better understand where the money is being spent by VCs and shift their business model to fit into these new categories, he says. The current venture capital investment nomenclature includes capital light and disruptive technologies that address large markets, according to Green. He promises to go deeper into his current investment thesis and the areas where he’s putting his fund’s money to work during his talk on Tuesday.
Jason Scott, Managing Partner, EKO Asset Management: Family Offices, Foundations Are Focused on Solving Problems
EKO Asset Management Partners is a New York-based investment management and advisory firm that develops and implements innovative approaches to financing conservation and environmental sustainability, including providing private equity and debt to ventures related to carbon, sustainable food, and green infrastructure.
The firm works with family offices and foundation investors — a segment that Scott sees increasingly growing more interested in deploying capital in strategic ways to solve specific problems. For example, these investors realize that strategic partnerships with other family offices and investors can have a bigger impact than doing one-off investments, and also generate attractive returns. Some of the areas he’s seeing the most interest by family offices and foundations is in solar companies, solar financing, energy efficiency financing, and sustainable seafood production, a rising investment theme at the firm.
The biggest challenge that Scott sees on an industry-wide level is the inability to communicate its successes to institutional investors in order to attract greater amounts of capital. He says there are a lot of positive trends in the cleantech and environment markets — such as carbon, climate, and water — including some strong exits and investors generating high returns on capital. But, so far, the industry has not been great about telling the story about opportunities in the sector, such as the fact that prices are dropping, demand is going up, and positive regulatory drivers.
In order to continue to grow, he says, the cleantech and environmental markets are going to have to do a better job at communicating successes to attract institutional investor assets at scale.
Paul Spencer, CEO, Clean Energy Collective: Community-Owned Solar Peaking Investor Interest
Community-solar project developer Clean Energy Collective (CEC) is one of the most active players in the space. Community-owned solar projects, or those that are collectively owned by participating utility customers that receive a credit on their electricity bills for the energy generated from the plant, represent a big untapped customer segment. So far, CEC has developed projects in eight states: Colorado, Kansas, Massachusetts, Minnesota, New Mexico, Vermont, Wisconsin, and Wyoming. New York is likely next on that list as a bill is working its way through legislation now, according to the Times.
CEC’s CEO Paul Spencer will be speaking on the “Beyond Venture Capital: Funding Greentech Implementation” panel at NextWave.
In December 2012 CEC completed a $13 million series A with Black Coral Capital and New Energy Capital Cleantech Infrastructure Fund and is currently raising a Series B round. The company is five years old, has 80 employees and is based in Carbondale, Colorado.
According to Spencer, the company is growing very fast and is requiring larger amounts of capital to develop new projects. However, their biggest challenge is to trying to meet the expectations of larger investors, and getting to the “next rung” of the ladder to attract larger pools of capital. Currently, they are attracting debt funds in the mid-size $100 million range, but are now looking to attract larger funds in the $300 million range. On the positive side, they are seeing strong investor demand for community owned clean energy projects.
Spencer says that he is looking to meet with Yieldcos, debt providers, sponsor equity, tax equity, consumer finance, and corporate strategics during the conference in the hopes of raising new capital.