Wednesday, September 16, 2009
Wednesday, July 22, 2009
The question is what is Samung's motivation? Samsung’s move may reduce manufacturing costs. Taking a lesson from the retail industry, perhaps Samsung’s motivation should be to enhance its marketing and public relations image. According to a Retail Systems Research and Retail Industry Leaders Association survey, retailers with above average growth emphasize the brand image aspect of green practices more than the cost saving aspect. Besides focusing on the energy efficiency of the stores, survey participants spend considerable time and effort on efficiency in information technology, and optimization of operations and supply chains.
Samsung’s announcement does not state whether the emphasis is on cost savings or brand image. However, the company wants to make the most energy efficient products in its product lines.
Wednesday, July 8, 2009
T. Boone Pickens, an advocate of wind energy, has announced that he is delaying a 667 turbine wind farm he was planning to develop in Texas. The question is how long will the delay last.
Four factors worked against the plan.
1. The falling price of natural gas and oil made wind energy less attractive.
2. Pickens’ hedge funds have lost almost $1 billion dollars.
3. The plan was tied to Pickens’ plan to sell water. He owns the rights to more water than anyone else in the US. At the same time that Texas landowners objected to the plan, the Department of Justice batted down the law that would have allowed Pickens to use the power of eminent domain to lay his water lines and electricity lines. The water plan was probably the deal breaker for many landowners.
Despite his considerable financial backing, Pickens’ involvement may have doomed the project from the beginning. Many critics saw the plan more as way for Pickens to cash in on his water rights than to create jobs or benefit the state. When economic conditions are better, Pickens should try again without tying his wind ambitions to his water rights. He might have much better luck.
Tuesday, July 7, 2009
PHEVs may overload the grid if consumers recharge their cars around the same time. Google believes that the grid must be able to handle this additional demand for PHEVs to become widely adopted. The company has a fleet of Toyota Priuses that have been converted to PHEVs.
Monday, July 6, 2009
Investments in solar remain down, while investments in utilities and cars have risen. Automotive related companies drew the biggest percentage of clean-tech investments. Cleantech Group attributes this to the government's stimulus package for the automotive sector.
If correct, this is interesting given that some VCs have expressed the view that startups that receive stimulus funding are not “stand alone” ventures. See my post on the views of VCs toward cleantech here. Could it be that these VCs are wrongheaded? Clearly, some of the heavy hitters in the VC world are investing heavily in cleantech, including Kleiner Perkins, Khosla Ventures, and Draper Fisher Jurvetson.
Wednesday, July 1, 2009
For companies like Yahoo, Microsoft, and Google, data centers are centerpieces of the business and consume large amounts of energy. The decision to emphasize energy efficiency is an important one. Yahoo! believes that energy efficiency will have a greater impact on the environment than a carbon neutral strategy would.
While that point is debatable, there could be other reasons for the switch. A carbon neutral strategy may be more expensive than an energy efficiency strategy. Yahoo! can maintain great control over its internal operations through an energy efficiency strategy. The company cannot control the green projects that carbon offsets fund, and those green projects are not internal to Yahoo!
Monday, June 29, 2009
Instead of producing ethanol, it looks like Dow plans to use the primarily to replace natural gas as an ingredient in plastic. For its part, Algenol looks more interested in producing ethanol. Algenol is working with Dow, the Georgia Institute of Technology, Membrane Technology and Research, and the Department of Energy to improve how oxygen and water are separated from the ethanol.
Not just any company can pursue algae as an energy source. Significant resources are needed. The Dow/Algenol project will cost about $50 million. Technological barriers must still be overcome, and that requires scientific expertise.
Friday, June 26, 2009
1. Putting a price on carbon (e.g., cap and trade system).
2. Investing billions per year in transmission systems.
3. Moving towards distributed or building based energy systems rather than purely utility based distribution. This applies to solar, not to wind.
4. Developing electricity storage systems.
5. Making wind and solar cost competitive.
The question is why the Pew Study pegs 30% renewables by 2030 as the "high" renewable scenario. If we can move down the cost curve, develop storage and battery technologies, and encourage private-public cooperation, can't we do better than that? If we don't, what are the consequences?
Wednesday, June 24, 2009
At the same time, Ghosn took a swipe at the gas-electric hybrid Toyota Prius and Honda Insight, pointing out that hybrids have captured less than 7% market share.
Nissan's plan to build battery only electric vehicles (BEV), and not plug-in hybrid vehicles (PHEV) is interesting. As noted at the recent United States China Green Energy Council seminar on Electric Vehicles, the number of companies planning to build BEVs is two times the number planning to build PHEVs. BEVs tend to be more expensive than PHEVs because of their reliance on batteries. Further, BEVs will put more pressure on worldwide battery production. These are just some of the tradeoffs between BEVs and PHEVs that should be examined more closely.
The question going forward is whether BEVs and PHEVs will be mutually exclusive, or whether they can co-exist.
Monday, June 15, 2009
Thursday, June 11, 2009
In 2008 "...angels spent $19.2 billion on more than 55,000 ventures... down from $26 billion in 2007. The average investment for each deal last year was $346,500.
By contrast, venture capitalists made only 440 investments in start-ups last year, putting the bulk of their money in later stages of a company’s growth in deals that averaged $7.5 million, Mr. Sohl said. “Angels provide the seed and start-up funding that turns acorns into trees like Starbucks, FedEx, Amazon and Google,” Mr. Sohl said.
The estimated 260,500 active angels in the United States are the largest source of seed and start-up capital for entrepreneurs (not counting their own savings or money from family and friends), according to Jeffrey Sohl, the director of the Center for Venture Research at the University of New Hampshire.
From the SF Chronicle:
"Only 17 percent of venture capitalists expect to increase their investments in the United States over the next three years, while more than half are investing in companies outside the country, according to a new survey.
Read the story
Wednesday, June 10, 2009
What does this mean? The existing grid is incapable of accepting more energy from renewable sources. This dilemma has implications for upgrading the grid, as well efforts to implement dynamic pricing for electricity. We will be paying attention to these issues going forward.
Monday, June 8, 2009
Monday, June 1, 2009
Earlier this year, the Chinese Academy of Sciences stated that it wanted solar to become a major energy source for China by 2050. The CAS is pushing for substantial R&D investments in solar, with the objective of improving the effectiveness of solar technology and lowering its cost. The National Development and Reform Commission recently noted that high costs, the lack of government subsidies, and limited market access pose obstacles to solar’s expansion in China.
While China installed 20 MW of solar power in 2007, the country installed more than 50 MW in 2008. The installed MW of solar power is expected to increase 20% each year until 2012. The National People’s Congress has set a goal of having 10% of China’s energy needs come from renewable energy sources by 2020.
Is this goal ambitious enough? Can the goal be achieved without significant participation by foreign companies? Will foreign companies have the opportunity to compete in China’s domestic market? Will the government permit foreign direct investment in Chinese solar companies?
These questions are related. If the government pushes up the timetable for meeting the 10% goal, then foreign solar companies may be needed to supplement the domestic companies. Investors who are bullish on the Chinese solar market can park their money in LDK Solar Co. Ltd. (NYSE ADR: LDK), Yingli Green Energy Holding Co. Ltd. (NYSE ADR:YGE), and JA Solar Holdings Co. Ltd. (NYSE ADR: JASO). The Chinese government recently announced that it is looking to open up the energy industry to foreign direct investment. At this time, it is unclear whether the solar market will be opened to foreign investors. Given the government’s increasing recognition that solar is a promising area, investors should keep an eye on this market space.
Wednesday, May 27, 2009
An article in this month's Far Eastern Economic Review notes several challenges to promoting green building in China:
1. Most green building projects in China are funded by international NGOs like the World Bank. The Chinese government has not yet provided much funding for green building.
2. The Chinese government subsidizes electricity and gas costs. As a result, green building – whether for old or new building – is not seen as very cost effective.
3. The breakneck pace of construction make green design analysis. Because building design and construction often occur simultaneously, green design gets little attention. The lack of energy efficiency experts compounds the problem.
The author argues that the Chinese government must back green construction practices by establishing and enforcing standards.
China is interested in green building. The California Public Utilities Commission has been speaking with Chinese officials about California’s net zero energy building goals. The Chinese are eager to learn about green building. Moreover, the US and Chinese governments are discussing how they can collaborate on efficient building practices to reduce greenhouse emissions.
Green building in China offers many business opportunities. Energy efficiency consultants and engineers and architects with sustainable building expertise can all contribute. Further, although there are restrictions on real estate development by non-Chinese, foreign developers can work together with local developers to promote green building practices.
Monday, May 25, 2009
"Kopelman thinks the problems in venture capital go beyond the recession. He says many old-line firms have gotten too big and unwieldy to build innovative companies the way they used to...
For Kopelman and other super angels, the answer is to get small. Over the past five years they have launched funds with $100 million or less and financed hundreds of companies, including Facebook, Digg, and Twitter. Ten years ago, when it cost $5 million to launch a startup, firms such as First Round couldn't exist. But thanks to plummeting technology costs, Kopelman & Co. can help companies launch products today for less than $1 million. "Five hundred thousand is the new $5 million," says Mike Maples Jr., who founded Maples Investments three years ago."
Thursday, May 21, 2009
There are enormous opportunities in the building materials and operations markets.
1. Buildings account for 40% of total U.S. energy consumption.
2. The California Public Utilities Commission has decided upon energy efficiency as its number one strategy to reduce carbon emissions in California.
3. 60% of all energy efficiency spending is for lighting, while lighting accounts for only 25% of commercial building energy consumption (building operations only). This mismatch in resource allocation is stunning. Dimming products account for only 3% of lighting sales. More resources need to be allocated to other aspects of building efficiency.
Because buildings account for a large portion of total energy consumption, achieving zero net energy consumption in the construction and operations is critical. CPUC’s goal is to have zero net energy consumption by 2020 in all new construction and by 2030 in all existing buildings in California.
Thus far, energy efficiency efforts have focused more on building operations than on building materials and design. Building operations includes lighting, demand side management, time of use programs, etc. Building materials traditionally includes weatherization and insulation. But materials science and facility design engineers are looking into how to use new and different combinations of materials in buildings, and how design, include building shapes and interior spaces, can be optimized for energy efficiency.
This often ignored area deserves a close look because of its large market and the potential to make a large impact on energy consumption.
In recent years, China has emerged as the world’s largest manufacturer of solar photovoltaic (PV) panels. Driven largely by strong demand in Europe, almost all of the solar panels manufactured in China have been exported to overseas markets. However, the current global financial crisis, coupled with recently dampened financial incentives for solar power in some parts of Europe, has significantly contracted overseas markets. The solar manufacturing industry in China is, as a result, under intense pressure to fend off what appears to be a bursting “bubble.” By promoting China’s domestic solar market, however, the Chinese government is presented with a unique opportunity to sustain the domestic solar industry, create more jobs, and enhance energy and environmental security. To be spurred into action, however, China’s planners must appreciate the true value proposition of solar, understand the present bottlenecks limiting solar deployment, and respond with appropriate policy actions to overcome these hurdles so as to create a vibrant domestic solar market.
Few issues keep China’s national planners awake more than energy and environmental security. According to Cambridge Energy Research Associates, China obtained 80% of its electricity generation from coal in 2007
• Read story
I attended the Innovation Journalism conference (about covering innovation, not about reinventing journalism, although the two topics definitely converged this year) and enjoyed a presentation by Xconomy founder Bob Buderi, who formerly edited Technology Review.
Xconomy is a web-only news site, covering innovation businesses in Seattle, Boston, and San Diego. It covers life sciences, tech, and cleantech along with other emergent businesses.
Today's issue has an interesting story about funding Viryd Technologies, a wind turbine company. All of the $2.2 million was raised from individual investors.
Check out Xconomy.com and consider signing up for their newsletter.
Wednesday, May 20, 2009
I met Christian Grant today at the Innovation Journalism Conference at Stanford. He conducts video interviews with a number of interesting guests, mostly who come to Stanford or Palo Alto.
Here's an interview Jennifer Fonstad, a managing director at Draper Fisher Jurvetson, about investing in clean tech. This was recorded in March 2008.
You can see Jennifer's portfolio companies here.
So it was semi-good news today to see renewable energy industry groups raise a concerted voice to Obama Land.
• See the story in today's NT Times.
Of course, it would be better news if the checks were in the mail.
Monday, May 18, 2009
This is my first post on the Eco-Investor blog. I thank Pam for giving me the opportunity to contribute to the blog.
I begin with the following question: Are VCs and clean tech a good match?
Many VCs have concerns about investing in clean tech.
1. Clean tech companies tend to have high capital requirements. In this environment, many VCs are shying away from capital intensive companies.
2. Clean tech has highly complicated distribution networks. Few clean tech companies provide stand alone products. Instead, most clean tech products are connected to other parts of the energy system. For example, in the United States at least, smart meters and most renewable energy sources are tied to the grid. For many clean tech companies, several pieces must fall into place for them to succeed.
3. Some of the end users and constituencies (e.g., utilities) are resistant to frame breaking change. In fairness, some utilities (e.g., PG&E) are actively promoting energy efficiency programs and searching for new technologies and solutions.
4. Clean tech companies may take long to scale and grow. One VC told me that in this respect, clean tech companies are similar to life sciences ventures. He does not invest in either type of company because of the long gestation period.
5. Some VCs view companies that take stimulus money as not independently viable. These VCs see stimulus money as a stigma.
On the flip side, are VCs the optimal source of money for clean tech entrepreneurs? What funding sources might be better for clean tech entrepreneurs, and why?
In order to accelerate the process of building clean tech companies, these questions need to be openly discussed by investors and entrepreneurs.
Saturday, May 16, 2009
Not only is this a great story, but it's also an excellent example of one of my specialties - web video marketing. (I will be teaching a one day class at UCBerkeley Ext July 18 - details soon available on their web site. Email me if you would like to be notified when it's on their site.)
Anyway, pretty darn cool! Kudos to MBA for not only creating amazing stuff but also communicating well about it.
Friday, May 15, 2009
June 4th, the CalCEF Angel Fund is putting on a day long seminar on the stimulus package. Learn more here.
In the evening, Hanson Bridgett will be presenting an evening workshop on cleantech investing. Panelists include:
Ira Ehrenpreis, Partner, Technology Partners
Anup Jacob, Partner, Virgin Green Fund
Rodrigo Prudencio, Partner, Nth Power.
The panel will be moderated by Jonathan Storper, Group Chair of the Sustainable Business practice group, and the Corporate, Securities and Tax Law practice group at Hanson Bridgett LLP.
For more info, click here.
The New Yorker this week featured a short piece GREEN COLLARS about a screening of this new film The Greening of Southie by the filmmaker to a group of blue - now green - collar workers in Astoria. Great viewing! See the trailer here or visit the film's site.
Toledo's rolling over its rustbelt legacy into 10,000 new solar jobs.
Xunlight is one of the companies featured in this ABC News story on Toledo's progress. Trident Capital is an investor.
• Link to video
And here's another video specifically about the company itself:
Here's a more focused video on the government funding pipeline for cleantech companies.
"Senator Sherrod Brown and Xunlight CEO Xunming Deng discuss how the economic recovery legislation will create new green energy jobs in Ohio."
And, finally, see the overview story on Trident's investment here:
Yes, according to Robert Hendershott, a professor of private equity and entrepreneurship at the Leavey School of Business at Santa Clara University.
“Potentially, the venture model for finding, developing and vetting new Web-based businesses breaks down,” he writes.
The venture capital model evolved to start and expand capital-intensive semiconductor companies. “Without resources beyond the reach of most entrepreneurs it simply wasn’t possible to create a new semiconductor company, or even an Internet company,” Mr. Hendershott writes. Now, Web start-ups are routinely started for less than $50,000.
He acknowledged that even if Web start-ups depend less on venture capital, other technologies, like clean tech, biotech and software, still need venture capital, and most firms invest in a variety of start-ups.
Jackson hails from New Orleans, got her master's at Princeton, and formerly served as the head of environmental protection for New Jersey. Critics says Jackson followed too many Whitman-era administration policies and is "a pliant technocrat who will follow orders." (Grist published a fairly decent, balanced overview of environmentalists' pros and cons about her appointment.)
In the meantime, see what you think of her appearance on the show last night (and feel free to comment below).
|The Daily Show With Jon Stewart||M - Th 11p / 10c|
|Lisa P. Jackson|
Thursday, May 14, 2009
Silicon Valley entrepreneurs and clean tech investors gathered today at the law offices of Sonnenschein Venture Technology Group to hear a panel of high level experts talk about the impact of the federal stimulus bill on cleantech companies in Silicon Valley. Though the event was billed with the come-on line "How to Grab a Piece of the Stimulus Bill's $50 Billion Cleantech Pie," the featured insiders from Capitol Hill, Wall Street, Chicago and the Valley were quite a bit more guarded in their expectations about the pace and direction of a federal gold rush.
Link to all photos on Flickr
The bottom line? Don't expect too much too soon from the government stimulus package, said DC-based Tom Jensen, head of Sonnenschein's renewable energy practice. "Be cognizant of the pace," Jensen cautioned. "Get mentally healthy with the concept of patience," he said, adding, "Don't waste energy expecting the government to act like the private sector."
Panelists said the country is in the midst of a major turning point - and that turning the Queen Mary takes time. "The new industrial policy decade is beginning now," said Deloitte & Touche's David Thelander, senior adviser to Deloitte's audit teams.
Thelander recommended that companies make sure from the start that they have "the necessary regulatory compliance resources in place to meet the new regulatory obligations - which may include the need to hire internal compliance staff...You need to have a process in place that shows you understand and can demonstrate compliance with the new requirements," he said, which includes plans to hire union labor. Using the example of a $3 million solar company seeking $75 million in loan guarantees, he said, "The winners here, in this huge shift, will understand regulatory compliance and build these requirements into their planning."
At the same time, panelists cautioned that businesses must be self sustaining and profitable in markets on their own and should plan on using stimulus funds purely as an accelerator.
Panelists said tensions exist over what the stimulus bill is designed to focus on - job creation - and what panelists were focused on - cleantech investment.
"The politics of creating jobs - that's the machine that needs to be fed - and fast," Jensen said of policy makers' current priorities. "It's jobs, jobs, jobs - get the money out the door to put people to work. There is a tremendous pulse in regulations and policy. It will be chaotic and they (the agencies’ staff) know that and they are doing the best they can."
"You have to understand that the cleantech community is still a small voice amidst many people with a century of highly capitalized investment in government. You're (the cleantech community) just scratching the surface in comparison," he said.
Jensen added that while government is gearing up to perform tasks at what is an accelerated pace, "most of the things you (the cleantech community) don't care about are the ones that have just been funded," referring to healthcare, labor, and state government.
In addition, the government needs time to ramp up, panelists said.
Trident Capital venture partner Mark Iwanowski and others said there are problems within the Dept. of Energy due to lack of staff.
Annette Walker of California CleanTech Open said the agency is doing its best to address the problems. "They have a small group over there but they're ramping up to have grant reviewers," said Walker. "They've found it’s really important to have high-quality reviewers in order to have a high quality program, so that's taking some time."
"There are lots of empty offices at the DOE, more than empty suits," joked Jensen.
On a more serious note, he said, "You have to understand no one in the government has ever done this on this scale - this is a once in a lifetime occurrence.”
Jensen and others pointed out that the new undersecretary of energy (Christina M. Johnson) has an academic background and has to get up to speed on running the alternative energy sector of the DOE. And, Jensen said, other appointees with more direct experience are still waiting for confirmation. In addition, panelists pointed out, no previous administration, including the Bush era DOE staffers, has ever had to initiate such a massive program at such an accelerated rate.
"People in government have been dealing with grant programs forever," said Iwanowski. "The same grantmaking activities have existed before at the DOE. But the challenge here is putting it in a tighter window (of time). The issue is accelerating all of this activity."
Iwanowski said the risk of acceleration is also one that's recognized by the DOE. "Nobody wants to risk too much and wind up in the Wall Street Journal for all the wrong reasons."
How should cleantech companies proceed in the face of these uncertainties?
Jensen said companies should not be confused about what lawyers and lobbyists can and can't do for client companies. "Don't pay people to read web sites for you. The agencies are pretty transparent. The information is on the web site."
"What you should pay people for is to help shape what the agencies are doing and to help you fit with what the agencies mean to be doing. Pay people who know where these things come from. Every rule has an agency behind it. Every agency has a culture behind it. Every culture is the result of an agency's history. We live in a world of the anthropology of law."
Said Jensen, "You should understand that we're at a hinge point in this story. An important part of the plot is happening right now. Right now the most important job skill for everyone in this room is peripheral vision. We are at the 90 day anniversary of the stimulus bill, and some major announcements may be rolling out very soon, even this week or next. But when we are talking about the stimulus bill, we're looking at policies which are the products of decisions largely already made on Capitol Hill.
"This week, this month - is when major decisions will be made in the Senate and the House. Energy and climate policy is all coalescing right now into major legislation. Waxman's revised bill is out today...Energy and climate change policy making and implementation of the stimulus bill changes in the stimulus bill are all taking place simultaneously. It's a process that is interactive - and because it is so complex it is obscure.
"There's no capital decision about energy and cleantech that's not at a very fundamental level being made by 535 members of Congress and the White House. There's no market left except as an incident of policy making."
At the same time that panelists acknowledged the stimulus bill’s focus was on job creation, there was little reaction to a question about partnering with green job focused initiatives (with groups like Green for All) or on projects focused on the priorities of green jobs czar Van Jones who recently moved from Oakland to DC to become Obama’s Special Advisor for Green Jobs, Enterprise and Innovation in the White House Council on Environmental Quality (CEQ).
It does not appear that government support for green jobs has intersected with the investment community’s traditional focus on IP and tech value creation, despite the federal funding preference to companies with a focus on job creation.
The stimulus bill is also meant to help stable companies create jobs, not to fund risky new ventures. When new regulations are written, ROI is expected to be a part of the DOE funding criteria, said Walker.
Panelists said no one knows whether it will be one month or one year before stimulus funds are being made available in the cleantech community.
“Dealing with the government is like working with a very, very large company,” said Annette Walker from California Cleantech Open. “It takes a long time to get the deal in place, but once you get it, it’s great.”
Right now, Walker said, is the time to “build relationships. The more we can know about who the players are, the better off we’ll be.”
And for those of you who read this far, please enjoy:
Speaking from the perspective of Wall Street, NY-based David Ethridge, managing director and head of the alternative energy group at Cowen & Company, an investment bank, said that banks and hedge funds had, of course, fallen out of the mix of investors. Said Ethridge, “There is a sense of reckoning now. People who have had these incredible A and B rounds - those are a thing of the past.”
"On the IPO side, it's still a nuclear winter, but now the clouds are breaking - a little bit - and people are beginning to solidify their base a bit more since they aren't constantly out there putting out fires."
Ethridge said the hot areas include water, for one. "People have put funds together but there's not a lot to invest in," he said, which was a sentiment echoed by others on the panel.
"Grid storage is also big. And every smart battery company I know is making the pitch that their technology applies to storage."
Chicago-based Shez Bandukwala, co-chair, Greentech Investment Banking with ThinkEquity Partners, said that, on the bright side, cleantech has been the biggest contributor to ThinkEquity's revenues.
On the investment side, Bandukwala said cleantech valuations had gone through a major shift. "Last year valuations were so much higher, but I'd say cleantech still remains top of mind."
"On the demand side of efficiency, we're seeing that lighting is very hot right now. Formerly it was a sector with a lot of smoke and mirrors but now the stuff is real. We're all living with inefficient lighting all around us so the big guys, like GE and Phillips and Acuity, are buying out these lighting companies."
Other technologies on Bandukwala's hot list include smart grid software and technology, hybrid and electric vehicles and battery technology as well as – surprise - auto assets.
"You'll see auto assets out there that will be available - for cheap - that can be redeployed," he said.
In Bandukwala's view, wind was less interesting, because he says it's maturing on returns. His take on solar was that it's still waiting for new technology to get commercialized.
Trident Capital’s Mark Iwanowski said he looks for "companies that have some edge on capital" and looks ahead to future pricing of key energy assets.
"We have several companies in our portfolio [Xunlight, Senergen and Solexant] that address the cost per watt issue," he said, "and over time our forecasting says that cost/watt has to come down. So that's a plus in our view."
Iwanowski said Trident is not investing in companies that are tied to oil prices or linked to volatility in the market itself.
William Brockenborough, general manager of operations for Chevron Energy Solutions, said there hasn't been a change in sentiment among his customer base in the demand side, but that the cost of capital is the more important dimension.
"Cost per watt is not the only factor," he said, "- but any hint of technology risk raises the cost of capital.”
"We're seeing spreads of as much as 100 basis points from competing lenders in project financing which tells me that the commercial banks are still wondering what their risk appetite is."
For more about the panel’s views on stimulus funding, see the blog post on this event.
A new Maryland business school study (featured in today's New York Times) found that business plans are overrated by entrepreneurs and not worth much to investors.
Study author and researcher David Kirsch, associate professor of management and entrepreneurship at the Robert H. Smith School of Business at the University of Maryland, said entrepreneurs should focus more on tangible activities that do impress investors. He says, "You’re better off investing in your idea, your social network, finding potential investors, potential customers – the intangibles around your business that are going to make it more likely you succeed. Invest your time in any other business-building activity but working on your business plan.”
The study looked at more than 700 dotcom era business plans, which may be a nonrepresentative time sample of business plans and investment decisions. Nonetheless, current investors seem to validate the findings, which may be timeless - to wit, actions speak louder than words.
See the video about the research here.
To obtain a copy of the research article, published in the May 2009 issue of Strategic Management Journal, click here.
Huey was the head of California's Dept. of Resource Management during the first Jerry Brown administration and after his term ended, he went around the globe in pursuit of sustainability models that work - for business as well as government. In 2001 he was awarded the UN's top environment prize for his work on promoting sustainable policies known as Green Plans, which included bringing top U.S. officials to Green Plans countries to see the results for themselves. Mexico City's adoption of a new Green Plan, focused on reducing pollution in one of the world's most polluted cities, is largely the (unsung) result of Huey's work. (For more info, see the video overview or in-depth presentation of Mexico's Minister of the Environment).
Now we are seeing the results of these kinds of policies have more impact than we knew - for just this week the New York Times has featured not one, but two stories about Scandinavian policy success stories (links below) that have led not only to a reversal of environmental degradation but an increase in economic success.
It was in Norway where Huey first thought environmental policies had "gotten it right." The problems with U.S. policy are too piecemeal, which is the hallmark of an early stage policy development. Policies have tended to become more wholistic over time, based on the wisdom and guiding principle in numerous instances of trying to help them integrate better with business needs for longer term development cycles.
In the past ten days, the New York Times has had two stories about countries with intelligent policies: Norway ("Thriving Norway Provides an Economic Lesson") and Holland, which, in fact, "remains among the most free-market-oriented in Europe," the New York Times states in the recent article "Going Dutch."
I've been impressed with the "architects" of the Dutch Green Plan, Herman Sips and Hans von Zijst, who also were instrumental in developing the EU's Green Plan. By the way, Holland's green plan was the result of a McKinsey business consultant - Pieter Winsemius, who became the Netherlands' Minister of Housing, Physical Planning and the Environment in the mid 80s before returning to run McKinsey's environmental practice consultancy. Winsemius initiated Green Planning in the Dutch government precisely to make environmental policy sync up with private sector business investment cycles.
That perpetual issue - of too many short term regulatory policies - was raised again this morning at the VLAB panel on the stimulus package by William Brockenborough of Chevron Energy Solutions. In his remarks, Brockenborough said his large-scale public sector client projects are highly impacted by short term regulatory policies. "The stability of the regulatory environment, of these tax credits, is short sighted - with the credits to expire in 2008. When some spigot like this for project funding lapses, and then the credit crisis deepened, institutions were and are not willing to invest. The problem is thinking too short term. Short sighted regulatory regimes make it difficult to pursue large scale capital intensive investments."
Meanwhile in Germany, a renewable energy law (EEG) enables solar power produced by renewable means to be purchased for $0.48 per KWh, or twice the market rate, for a contract period of 20 years.
Although Germany gets half the sunshine that parts of the U.S. do, the results of its policies are that:
• 50+% of worldwide solar installations are being installed in Germany
• Germany has created 40,000 new solar jobs in Germany and is projected to have 200,000 by 2020.
As Van Jones departed Washington to work as the green jobs czar in the Obama administration, he made a clear statement by choosing a San Jose labor leader to head his Green for All group, which raised $7 million in one year on the strength of both the idea of Green for All and Jones' charismatic leadership.
Now, with Jones in a position of political power, green job advocates have the burden of proof, moving, as he says, "From Inspiration to Implementation." To understand where this movement is at, check out the latest Green for All video here:
In the meantime, what's making headlines is more job layoffs and the UAW's legal bankruptcy battle to preserve health benefits for Chrysler's retired workers.
Here's a brief Green for All video about a job hunter hunting down stimulus package applications and seeking to insert green jobs into the mix:
What do you think of the green jobs movement? Will it find something in common with Valley capitalists? (It's looking for deals - just give Aimee Allyson a call.) And vice versa - will the greentech movement find a way to join with labor to help advance cleantech companies' own agenda? Or are these incompatible goals? Or a good topic for a future event?
Your comments are welcome.
"Your goal has to be to get the greenest solutions to the poorest people," Jones told me. "That’s the only goal that’s morally compelling enough to generate enough energy to pull this transition off. The challenge is making this an everybody movement, so your main icons are Joe Six-Pack—Joe the Plumber—becoming Joe the Solar Guy, or that kid on the street corner putting down his handgun, picking up a caulk gun."
Wednesday, May 13, 2009
Pacific Gas & Electric, a California utility, announced Wednesday that it had agreed to purchase 1,310 megawatts of solar thermal power — enough to power 530,000 homes.
BrightSource Energy will provide the technology — which consists of mirrors that use the sunlight to heat water and spin turbines — and plans to build facilities in California, Arizona and Nevada.
“From an industry perspective, the agreements between PG&E and BrightSource Energy now represent the largest solar deal in the world,” touted BrightSource’s chief executive, John Woolard, in a post on a PG&E site.
It is a lot of juice — though it’s worth noting, as Mr. Woolard himself does, that today’s announcement is really just an expansion of an existing 900-megawatt deal that BrightSource signed with PG&E last year, which was then touted as the largest in the world.
Read the rest of the article
"At a Sustainable Industries breakfast meeting in San Francisco last week, Anup Jacob, a founding partner of the Virgin Green Fund, a renewable energy investment fund started by Richard Brandson’s Virgin Group, noted that many renewable energy and cleantech start-ups are limping along with subsidies from the government stimulus package, which will run out in 2010.
In Mr. Jacob’s view, a sustainable business model is one that does not need to rely on government funds in the long term. “We underwrite to no government subsidies,” he said.
The outlook on green investing in China, however, looks markedly different. Environmental protection and energy savings are still fairly new ideas in emerging Asian markets, so these sectors have huge development potential. And unlike in the West, the fact that the Chinese government is supporting the growth of its green economy appears to be boosting the confidence of foreign investors.
• Read the rest of the article
Drawing on what the panelists in this excellent event told us about their worlds, it's clear that the cleantech kids are getting perhaps a little bit of a stimulus, but it doesn't appear to be a fast track pass to "Go to the head of the class." While the economic stimulus package helps us build roads, it doesn't appear to be driving us at high speed to a new world of electric cars produced in America. And it's apparent that Silicon Valley may be too mature to really drive serious innovation in cleantech. Too fat from years of the tech sector, the Valley VC are the big guns out there for the big exit with the least capital investment...which is driving them to prefer smart grid investments, software investments, and the like. In the meantime, they may be missing the biggest gold rush of the 21st century, especially now that the genetics sector is under the gun (witness the new gene patent lawsuit brought by the ACLU mentioned in the NYTimes today.)
In the meantime, look at China...As PR Yu mentioned, China is becoming a major exporter of solar technology. And U.S. investors suddenly seem to be taking note, witness a brand new article in the NYTimes today. And as Fraser Smith of Electradrive mentioned, while IT and the tech sector was largely a locally funded phenomena, as far as cleantech goes, the game is already global.
Some formerly U.S. based companies are going to go public in Germany, where the tax laws are more favorable and the country is already a leader in solar. And here on this panel, we have Siemens lining up outside the gates of UCBerkeley, ready to fund cleantech-ers. Cyclos of Berkeley is one of their 10 portfolios companies.
What is behind all this? Is it the 8 years of Bush-ism and oil company world domination? In the meantime, Europe has been making eco-innovation a major platform in their business planning with its Lisbon Strategy. The Lisbon Strategy slogan is "clean, clever and competitive."
According to EU Green Plan author, Herman Sips, who I interviewed in Nov., "Europe has decided to make eco-innovations - that’s the buzz word in a way, or a shortcut to put it that way - to make that part of their economic strategy, maybe not yet at the heart of that strategy but very close to that. And it’s called the Lisbon strategy, which aims to make Europe the most competitive region in the world and the cleanest one and it's clearly seen that eco innovations are the key to that...what the EU is doing is setting up specific technology platforms, where everyone who has a sort of interest in a certain technology gets to the table and tries to shape markets in such a way that green development and implementation of technology spurs off.
"Basically the idea, in all honesty, came from the Dutch presidency in 2004 and from the recogition if you try and find a niche way you can compete in, with the U.S. but also with bigger players in Asia, it can never be on flexibility, it can never be on labor costs, so then we thought it has to be something around quality - so it better be environmental quality. So we came up with the slogan "clean, clever and competitive."
To see Sips' video interview, see this brief clip:
There is also a transcript of the longer (unedited) video interview I did with him here on Google docs.
To learn about applying the lessons of Green Plans in California, check out the Fort Baker Leadership Conference, where work is taking place at a high level to inject this kind of political momentum into California and the U.S. For more about Green Plans, see the Resource Renewal Institute web site or YouTube channel.
My question, and quest, is to find out what the U.S. is doing to compete with the Lisbon Strategy, if we have any strategy at all? If you know of anyone to comment on this topic, send them here.
April 17 the MIT/Stanford VLAB's Emerging Business Forum presented a well attended half day program "Integrating the Clean Tech Value Chain," which was a lively and informative event. Here are the notes I took from the second half of the half day event.
I haven't blogged much about the workshop content, so I'll do that here. The panelists above are (from left to right) Elias Blawie, Partner, Cooley Godward Kronish LLP, Lee Cooper, Manager of Emerging Technologies at PGE, and Stefan Heuser, President and CEO of Siemens Technology-To-Business Center in Berkeley. Cooley hosted the event, so they definitely got a seat on the panel...but Elias delivered a lot of good information, so it was a win-win all the way around. Both PGE and Siemens have money and partnerships to help cleantech firms, so these were great panelists to feature.
Panel 2: Clean Tech Value Collaborations: Clean Tech Investment and Trends, Clean Green Collaborations, and Advice for Clean Tech Startups
This panel focused on how emerging companies with technology can get help from larger business entities in the form of investment or partnerships.
In introductory remarks, Lee Cooper, Manager of Emerging Technologies at PGE said PGE is responsible for providing power to 1/20th of the U.S. Notably one of the most progressive utilities, PGE is highly invested in moving rapidly into the smart grid world, and has rolled out 2.3 million smart meters to date.
Stefan Heuser, President and CEO of Siemens Technology-To-Business Center, located in Berkeley, seeks companies with technologies to convert into Siemens companies or businesses or independent companies. Siemens typically invests between $200,000 to $1 million and currently has 10 companies in their current portfolio. They have done 3 deals in the last 7-8 months.
HIGHLIGHTS FROM EACH SPEAKER
Blawie had a lot of great info about the big picture of cleantech investments in the Valley. He pointed out two top trends he sees from his perch as to who is getting VC funding:
1. Great products with great markets with great teams. If one of these components is missing or merely good, the company will probably not be funded.
2. He said 7 out of 10 VC deals were in cleantech in recent history, but 6 of the 7 were in solar, in the $100-300 million range. He felt this was a distortion of the CT (cleantech) investment, and he characterized some of these as project style deals. He said the market is alive but it's "back to basics."
He discussed the convergence of Silicon Valley's IT and CT as key to understanding the investments the Valley is focused on making. Valley VC like smart grid electronics and software areas, for instance anything that fits into PGE's conversion of dumb wires to IT-based communications, i.e. controllers, monitors, systems, etc. He also thought the Valley VC like deregulated areas. Smart grid software fits the bill for investment because it's more capital efficient and utilizes the Valley's greatest historical strengths.
Blawie commented on the Solar City deal, saying its financing was a breakthrough.
In 2009, in Q1 he said Kleiner Perkins had done 4 deals and CMEA had done 3 with smart grid technologies being the most capital efficient. "You don't need $100 million," he said of these deals and the companies are much more like the software companies in days of yore. "The Valley is comfortable with these types of investments," he said.
Looking at the stimulus earmarks, Blawie said there is a great opportunity for CT companies to get investment. The PGE web site tracks developments daily and info is also available on the California Energy Commission web site (and webinar). He spoke of $6 billion in DCE loan guarantees among the $43 billion available.
Counting all the G20 countries, he said there is a total of $400 billion in investment that is available.
At the same time, because the Obama administration is still so new, and the stimulus funding so nascent, there is a long cycle to getting DOE funds, for instance, due to insufficient staff at the DOE. Rules are just now being published. Applying for these funds is an intensive process, requiring documents with hundreds of pages for submission.
Blawie contrasted VC funding cycles of 12-18 months with stimulus fund cycles of 18-24 months. The Teslas, Brightsources, and other companies that are finally seeing some investment from the government have been in the cue for a year or two already.
To learn more, Blawie recommended visiting the Cooley web site portal on the Stimulus here.
Better news than the stimulus funding, according to Blawie, is having the government as a customer where, he said, there was $28 billion in potential revenue.
Blawie also said lots of utilities are not as far along as PGE and should be viewed as "pilot friendly" for technologies that move power from dumb to smart communications.
Thursday at 8 AM: Venture Connection Roundtable: How to Grab a Piece of the Stimulus Bill's $50 Billion Cleantech Pie
To attend, contact Maria DeLuca at email@example.com or 973.912.7184.
Here's the agenda:
This Venture Connection Roundtable event is supported by VLAB's Emerging Technology Lab.
Date: Thursday, Mary 14, 2009
Time: 8:00 -- 10:00 am
Venue: Sonnenschein Nath & Rosenthal LLP, 1530 Page Mill Road, Suite 200, Palo Alto, CA 94304
Moderator: Victor H. Boyajian, Sonnenschein Nath & Rosenthal LLP, National Chair of Sonnenschein Venture Technology Group
Tom Jensen, Partner, Public Law & Policy Strategies, Washington D.C., Sonnenschein
David Ethridge, Managing Director, Head of Alternative Energy Group, Cowen & Company
Shez Bandukwala, Co-Chair, Greentech Investment Banking, ThinkEquity Partners
John Bergwell, Director of Project Finance, Chevron Energy Solutions
David Thelander, Director and Senior Advisor National Cleantech Practice, Deloitte & Touche
I am delighted to announce the participation of a second author in the Eco-Investor blog: Douglas Park, who I met when he moderated the VLAB Clean Tech Value Chain panel. Doug formerly taught strategy at Stanford Business School.
Doug and I have since discussed some of the challenges and opportunities in cleantech and have decided to blog together here.
About Doug: Doug is a business and legal strategist. Formerly a professor of management in Hong Kong, Doug is an award-winning teacher of strategy, entrepreneurship, and online commerce. In addition, he has published articles on competitive dynamics and organizational change in leading academic journals. He has consulted to private and public companies on strategy, organization, business planning, and corporate governance in Silicon Valley and China. He has also served on the board of directors of Microweb, Ltd., an enterprise resource planning firm in Hong Kong. Through his various experiences, Doug has gained valuable insights into the strategic and legal issues of doing business in China.
Doug received his J.D. from the University of Michigan Law School, his Ph.D. in Strategy and Organization from the Stanford Graduate School of Business, and his A.B. magna cum laude with highest honors from Harvard College. Among the numerous honors he has received are a National Science Foundation Graduate Fellowship, a Portable Fellowship from the Association for the Advancement of Collegiate Schools of Business, and several Citations for Teaching Excellence from the School of Business and Management, Hong Kong University of Science and Technology.
He has worked with and represented a broad range of clients, including iVillage, Sina Corporation, China Macro Finance, Dorado Corporation, Pacific Gas & Electric, Smart Patents, and Stephen Slesinger, Inc.
• Visit Doug's web site
Tuesday, May 12, 2009
The series has one of the best web sites as well, with many extra videos available via podcast.
The E2 series showcases best practices in environmental design, building and technology around the world. I've loved every episode, including the show about congestion pricing in London, the free bicycle movement in Paris and the amazing work in China in green building.
Check it out!
• E2 Site on PBS.org
You can also watch it online on Hulu.com (with ads, but hey - it's instant!)
This is the design series, seasons 1 and 2
• E2 on Hulu.com
Of the 12 companies that presented at the SF Expo in April, the ones that appear to have positive environmental impacts (as far as I can see) are (in order of appearance):
1. Enroute Systems
This company makes shipping more efficient for mid size companies which is not only cost saving but energy saving as well.
This company, featured in the reality TV series Startup Junkies (or watch it on Hulu), digitizes mail for a fee and has unique software that national postal organizations are finding helpful. Obviously, this is a green-friendly company.
Cyclos is commercializing software to make semiconductor clocks more efficient, thereby saving energy.
4. Signalink Technologies
Signalink enables electrical wiring to become part of a smart building network and reduces energy consumption.
Powermand seems like it will have a positive impact by reducing energy consumption in large buildings.
Note: Unfortunately, the most ecologically unfriendly company is the one that won the SF Expo's award. Nest Collective produces baby food (through Plum Organics) that is absolutely terrible for the environment. Although the company's Plum Organics web site makes much ado about its sustainable packaging for its children's food products, the web site features no mention of the baby food containers that are virtually indestructible - composed of heavy duty plastics that will never go away. Unfortunately, I don't have a picture and there is none (for obvious reasons) on the company's web site. The only picture you will find is of the box that the baby food plastic containers come in.
In addition, the first two items I picked up from Revolution Foods, Nest's other company, were a disappointment. Despite all the talk (and branding) about nutrition, both were products where the number one ingredient is cane juice - or sugar water, for those of us who don't write food labels. It's a very sad state of affairs that Nest is just one more company trying to co-opt Alice Waters' very worthy Delicious Revolution with a campaign around "moms are the revolution" that tries to sell these very worthy moms and kids sugar water packaged as food in lots of packaging. Not very sustainable!
I've puzzled a bit over why the angels voted this company best of expo. Was it the fact that this was the only female CEO? Did they fall for the pitch that the company's foods were nutritious without reading the labels? Was it because the company uses only stock to acquire other companies? Or was it because the Nest booth hands out free samples? It's hard to tell just why, especially because branding can be so deceiving.
Panelists on the first panel, "Clean Tech Emerging Leaders Speak On: Market and Offering, Current Position and Background, Challenges" included five prominent tech company representatives, three of whom are pictured above -
• ATDynamics' Engineering VP, Chuck Horrell
• GroundSource Geothermal CEO Dennis Murphy
• Mohit Singh of Seeo, Inc.
Also on the panel were: Fraser Murison Smith, CEO, ElectraDrive, and PR Yu, CEO of Optony Inc.
Chuck Horrell from Advanced Transit Dynamics, a company that helps save diesel trucks save fuel, says his company has been looking into and finding potential in attracting state level grants. "VC's don't find us that sexy since the trucking industry is a slow moving target and there aren't billions to be made," he said.
Dennis Murphy from Groundsource Geo, a company that makes heat source pumps easier to install, is dealing with promoting a technology that is definitely not a household word. But the products it makes have great value, according to Murphy. The product won the overall Sustainability Award at the 2008 California Clean Tech Open.
Groundsource Geothermal's solution sounds so elementary - but it saves so much. According to Murphy, "150% of the trouble and 2/3 of the cost is in the drilling" to use geothermal heat source pumps to help regulate temperature. Murphy says the company creates elliptical shaped (not round) holes to sink the heat pumps, drawing on technology used in China in 3000 BC. "We are not looking for heat," he says, "we are looking to use the constant temperature underground - anywhere from 6 feet to 1,500 feet below the surface- to exchange heat."
Hot water can be a byproduct of this technology.
"In I/O terms, this can be a 550% rate of efficiency," he said. "For every unit of electricity used, you get five units back in heating."
Murphy also said his company, while potentially profitable, has not been exciting to VCs because it's a service business with a franchise model.
Singh spoke about his company, SEEO, Inc., an energy storage technology company that is tackling the issues of batteries by replacing liquid with a solid polymer. The cost per cycle is an important statistic. A lithium battery is 600-700 cycles, while SEEO's polymeric battery lasts 400 cycles. The ploymeric battery is much safer, since it has no flammable components, he said, in contrast to the industry's current safety issues.
Fraser Smith from ElectraDrive talked about his company's technology, which can help save auto fuel and emissions. He likened electric vehicles to computers on wheels and described his efforts as tackling the OS (or operating system) of electric vehicles. Fraser Smith said the sweet spot for ElectraDrive's technology are wholely owned fleets. The company is currently negotiating with the city of San Jose which has 2,900 vehicles and a legal mandate to go clean tech by 2013 - a tight timeline.
Comments from the high level audience were as informative as the panelists presentations.
One audience member talked about how easy Silicon Valley finds it to transition from IT to CT when software is the product. "The Silicon Valley ecosystem is designed around IT; we have a social network here in the Valley where you can ask around for anything or anyone with the expertise that you need. When you're ready, you can ask around for a VP of marketing, engineering, etc."
Panelists agreed that California's AB32 legislation was contributing to their success.
Fraser Smith also pointed out that, while the IT and computer revolution had been an often local affair, launched with Valley VC, the clean tech revolution was already quite global. "Now capital is international," he said. Also in contrast to the old IT high tech model, he said there are now more public aspects to the CT. "It's driven in part by social causes, and legislative reform, along with public funding."
PR Yu of San Jose-based Optony, Inc., talked about the rapid pace of solar energy innovations coming from China. "Last year there were 10 IPOs on the equivalent of the Chinese NASDAQ," he said. He said that U.S. solar investment spent more dollars but had less success.
The Chinese solar industry is selling very little internally in China, according to Yu, and a great deal outside of China. "There is only a tiny solar market in China - about .12% of the market," he said. "Ninety eight percent of Chinese solar products are sold outside of China."
I attended (as a blogger) the Keiretsu Forum's SF Expo April 30 in my continuing effort to learn more about how efficiently (or inefficiently, as I suspect) entrepreneurs and early stage companies that have a positive effect on the environment head down the runway toward becoming functioning enterprises.
This spring expo event was the first time I'd been to a Keiretsu event and I have to admit I found it to be quite an exciting world. With the average Keiretsu member having net worth of $8 million, these angel investors can definitely vote with their pocketbooks to enable and empower leading edge companies to move forward.
For those of you unfamiliar with the Keiretsu Expo format, the event is a regional half day conference; this one took place at the PGE auditorium in downtown SF (across the street from Well Fargo's Wholesale Bank, where I used to work).
Investors hear pitches from 12 companies who are seeking investment. Before the pitches, the group heard from gubernatorial candidate (and current State Attorney General) Jerry Brown. I'll publish his remarks in a separate post and on Scribd.com.
I'll also post about the companies that I consider environmentally positive in a more detailed post.
Before I get around to the finer points of the content, enjoy these photos from the event which I posted on Flickr.com.
Monday, May 11, 2009
I like the historical bit about what happened in the Renaissance, for instance.
Anyway, if you want to have your thoughts provoked, take a look: