A Deep Dive with Black Coral Capital
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the economic value propositions of the different models that we back.
X: Are there specific cleantech areas—say, thin-film photovoltaics or biofuels—that you might steer away from, either because there’s already enough venture money chasing them, or because the payoffs are taking longer than anticipated?
RD: Right now, because of the overall economic conditions, there are good economic opportunities across the landscape. There are a lot of companies that have a lot of capital deployed in developing their technologies, even in some of those overexposed sectors that you just mentioned, where you can get in at a reasonable price. I’m a big fan of solar as a long-term technology. I do think it’s challenging to talk about how, when you have 200-some venture-backed solar startups, all of them or even a majority of them end up being successful investments.
But even within the overexposed sectors, there are some good opportunities. Let’s look at solar really quick. Everybody put all of this money into new manufacturing technologies for solar cells, yet there are major parts of the rest of the value chain that remain underinvested. We actually have to get the solar panels onto rooftops, and build the rest of the system, the inverters and the writing, and it has to be cost-effective. This is one of those things where experienced investors will be able to find good investment opportunities, especially if they’re looking for parts of the value chain that are underinvested. That’s not to say that Black Coral will necessarily match my personal approach, but I am drawn to technologies that are scalable and that boost efficiency.
X: Black Coral has offices in Boston, New York, and Montreal, so you have a pretty heavy East Coast presence. Will your investing have a geographic focus, and how are you feeling these days about being a New England-based cleantech investor?
RD: We’re going to be investing pretty broadly. I don’t think we’re going to have a particular geographic focus. We’ve already got a commitment to an overseas venture capital fund, for instance. So especially when it comes to our LP commitments, we are going to have a fairly broad scope.
In terms of being here in New England, yeah, I was pretty excited about the opportunity to continue to be investing here in Boston, where there is a pretty decent venture capital scene in cleantech. I think that while there has been a significant amount of activity in cleantech venture here, and there is a good groundwork in terms of both the innovation scene and the later-stage-related private equity activity like project finance, in general there is still a lot of room to grow here in New England and a lot of room for specialization.
X: What can you tell me about the managing partner at Black Coral, Christian Zabbal?
RD: Christian comes out of the management consulting world, and so he’s a real expert, a really smart guy when it comes to investing in management teams and managerial talent. If there is one success factor in cleantech, it comes down to management and execution. So being able to work with Christian is a great opportunity.