Greenstart Hatches Four Startups, Proving Accelerators Work in the Energy Business

12/9/11Follow @wroush

Will the startup accelerator model that’s proved so popular and successful in the Web and mobile sectors also help to boost entrepreneurship in other industries, such as healthcare and cleantech? In a tottering economy that needs all the job-creating companies it can get, that’s a crucial question. And here in the Bay Area, it’s been getting a thorough test this year.

Back in August I reported on the first class of 13 startups graduating from Rock Health, a new health-tech incubator with offices in San Francisco’s Chinatown. In just five months, the startups came up with a dazzling array of products and services, ranging from diabetes-prevention programs to iPad fitness training to meditation aids. I won’t be surprised if several of these Rock Health alums strike it rich.

Just as Rock Health was winding down, another new accelerator, Greenstart, was getting underway a few blocks down the hill, in San Francisco’s Financial District. Greenstart invests in cleantech companies, with the goal of promoting renewable-energy technologies and reducing the nation’s carbon footprint. Four companies participated in Greenstart’s inaugural 12-week session, and yesterday they made their formal “demo day” pitches to investors (though one of them, Tenrehte, didn’t need the money—it had just signed a Series A term sheet with unnamed venture investors).

Greenstart's Demo Day session ended with a networking party. At far left: Tenrehte founder and CEO Jennifer Indovina.

Once again, I was impressed by all that these companies had accomplished. Their founders gave polished presentations, and seemed to have a solid grasp on the potential markets for their products, which include self-tinting windows (SmarterShade), an inexpensive way to mix biofuels with diesel fuel (Sylvatex), an online game designed to heighten consumers’ awareness of their energy consumption (Wa.tt), and a wireless system for managing the energy flowing through electrical plugs (Tenrehte).

So while the sample size is still small, there’s starting to be some evidence that accelerators are effective, even in slow-moving fields like healthcare and energy.

That definitely wasn’t a foregone conclusion. The most famous tech accelerators, such as Y Combinator, TechStars, AngelPad, and 500 Startups, are able to churn out dozens of promising new companies every year in part because their canvas is generally limited to the Internet and the world of Internet-connected devices. In that realm, a magic confluence of infrastructure components such as open source software, cloud computing, and app marketplaces has made it drastically easier and cheaper to start new companies. The healthcare and energy industries, by contrast, are about as Neolithic as they come. Software and the Internet are only beginning to have a real impact in these businesses. More money is at stake, the big players are far more deeply entrenched, and getting a new product to market means negotiating a daunting maze of existing supplier-customer relationships.

Rock Health and Greenstart have both found formulas that help get their companies off to a strong start despite the long odds against them. One of Rock Health’s main techniques is to avoid a frontal assault on the healthcare system, and instead deploy companies building various health-related Internet and mobile products to nibble around the edges. (Blueprint Health, a new accelerator in New York, is adopting a similar strategy, but with a focus on enterprise software rather than consumer products.)

Greenstart’s key tactic, I gathered from attending yesterday’s event, is slightly different. It aims to succeed mainly by … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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