Cleantech Investors, Startups Try to Pair Up in New Climate for Industry

11/27/13Follow @MichaelXBD

A few years ago, investors raced to put money into the hottest clean energy startup.

Some people might not remember those days fondly, especially as a few of the biggest bets turned into breathtaking busts. In some cases, like the now-infamous Fremont, CA-based Solyndra, the technology and startup’s management just weren’t ready. Across the industry, the plummeting price of natural gas undercut the competitiveness of power from renewable sources like wind and solar.

The boom years followed by the busts rocked the cleantech industry and have dramatically changed the investing landscape. Next week, industry leaders, cleantech startups, and investors will take stock in Denver at the National Renewable Energy Laboratory’s annual Industry Growth Forum.

NREL is a Department of Energy research and development center located in Golden, CO, about 15 miles west of Denver. It has become one of the pre-eminent research labs in the world, and the forum is its attempt to provide the private sector the chance to learn about new developments and technology that has commercial potential. The event also is a chance to connect entrepreneurs with investors, said NREL project manager Kate Cheesbrough, an event organizer.

About 50 venture capital firms, accelerator programs, labs, or companies looking to make strategic investments will be on hand, along with 30 startups trying to raise money or awareness.

“Ultimately, for entrepreneurs, the forum raises their profile and credibility. We can point to the fact that collectively, companies who have presented at the forum since 2003 have raised nearly $5 billion in growth financing,” Cheesbrough said.

The diversity of startups that will be on display run the gamut of technologies that get lumped into cleantech, which is probably too broad of a label. Along with traditional renewable energy technology like wind turbines and photovoltaic solar systems, companies working on advanced batteries, improved HVAC (heating, ventilation, and air conditioning) technology, and data analytics will be presenting.

Along with the latest technology, the forum is an indicator of the investment climate.

“The pendulum in the past couple years swung away from us, and I think it will absolutely swing back. Energy is a long-term challenge that this country and the world face,” Cheesbrough said.

“There are some investors that have left the space, but that doesn’t mean there’s not still numerous opportunities to plug in that are available. There’s a lot of hope, and people are positive,” she said. “This isn’t doom and gloom.”

The types of investors that attend the forum—and make investments—have changed over the past few years. [See this article by Xconomy's Benjamin Romano for more.]

“You saw a lot of venture capitalists run toward renewable energy at full speed a few years ago, and in recent years, particularly the past two or three, you’ve seen them move away,” Cheesbrough said. “However there are some new players that have entered into the space that are more patient with their capital.”

The new players include corporations with venture capital arms looking that want to learn about industry trends and possible make strategic investments, she said. Among those scheduled to attend are Germany-based BASF, the largest producer of chemicals in the world, Germany-based electronics and engineering conglomerate Siemens, South Korean electronics company LG, and Saudi Aramco, the state oil company of Saudi Arabia.

Corporate venture investors usually have different goals than traditional VC firms. They tend to focus on potential acquisitions, and Cheesbrough said their time horizons can be longer than VC firms that have funds that need to return money to investors within 10 years.

That could be a very good thing for the industry in general and the startups coming to Denver. Many are seeking investments in excess of $10 million. Solexant, a San Jose, CA-based company that is developing thin-film photovoltaic technology, is the most ambitious. It is trying to raise $50 million.

But traditional VCs, accelerator programs, and even family offices will be sending representatives, Cheesbrough said. They include Access Venture Partners, a VC firm with offices in Colorado and Texas that has a number of cleantech companies in its portfolio, and the Houston-based SURGE accelerator.

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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