Wednesday, May 13, 2009

VLAB Panel: Notes from the Cutting Edge of the Cleantech Revolution, Part 2



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.

INTRODUCTORY REMARKS


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.

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