When VCs Run Out of Energy: The New Era of Cleantech Investing
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comprise the context for cleantech investment decisions. Solazyme, a public biofuels company, has diversified into skin and personal care, nutrition, and chemicals in addition to fuel. In our own backyard, Oasys Water, which was initially conceptualized as a water desalination technology solution for agricultural and drinking water purposes in 2009, has re-focused to go after the domestic multi-billion dollar fracking market. Energy technology innovation and entrepreneurship must find a way to thrive in existing market conditions.
3. Although it is frequently pointed out that cleantech stumbled in part because it blindly followed habits developed in other sectors, the fundamentals of venture capital investing still apply: team, technology, markets. There are good arguments for the primacy of any of these, but for me it is ultimately the team—through perseverance, creativity and execution—that determines success. Where would Tesla be without Elon Musk? Matthew Nordan’s secret formula for identifying a great cleantech team is to look for bands of brothers and sisters—including the core inventor—that come together on their own, form a complete team, and have a leader fit for the long haul. I could not agree more. Terawatt’s first investment, MC10, was just such a band of brothers with a phenomenal platform technology. Since then, we have seen this band work beautifully through every early-stage startup challenge, from building a world class team to signing its first customer deal.
Is it time to jettison the word “cleantech”? There are no clear successors, but I prefer “resource efficiency”, which encompasses energy, water, food, land, and other critical resources. In any case, there are probably as many different ways to describe the investment category as there are investment strategies to address it.
All that said, I think we should keep the word “cleantech” (and not just to preserve Rob Day’s Twitter handle): neither the irrational exuberance that inflated it nor the knowing hindsight that disparages it are the true arbiters of its value. It is still early, and given the size of the opportunity, cleantech is an investment category that may well redeem itself.