Xconomist of the Week Christina Lampe-Onnerud Talks Cleantech
It’s been less than a year since Boston-Power, a lithium-ion battery maker, announced it had raised a whopping $125 million Series F funding round from Beijing-based GSR Ventures—and was moving most of its operations to China to chase down the electric vehicle market in that country.
It’s seeing the first big payoff from that decision. Today, the company is announcing that it has inked an agreement with Beijing Electric Vehicle Company (BJEV), the electric vehicle arm of Beijing Automotive Industry Company (BAIC). The Chinese company will use Boston-Power’s products in hundreds of electric vehicles starting this year, and in thousands of vehicles come 2014.
Boston-Power—previously based in Westborough, MA—has also added to its bankroll since the China shift. At the end of last year, the company announced another $30 million in funding, for a total pool of $346 million.
I took the time to sit down with founder and now international chairman Christina Lampe-Onnerud, an Xconomist, to chat about some big themes in cleantech. (Think China’s policies, U.S. stimulus funding, and strategies for building a company. Oh, and the talent crunch extends all the way to China, too.)
They were timely subjects, given the month we’ve seen from Waltham, MA-based A123 Systems (NASDAQ:AONE), a battery maker that’s been considered a competitor to Boston-Power. At the beginning of July, A123 told investors that it had four to five months of cash left to fund its operations. That’s after it reported a $125 million loss during first quarter 2012.
Read on for highlights from our conversation.
Xconomy: What does the deal announced today mean for the company?
Christina Lampe-Onnerud: It takes a long time to build a real company that can do things. I feel like now we have built a real boat and it’s sailing on international waters. This is the first time we’re acknowledged by big, real, Chinese customers.
X: What has the climate been in China for cleantech?
CLO: The reason we decided to move to China as our primary market is the recognition that China really has an energy problem they’re trying to solve
China is very, very focused on deploying sustainable energy. They have levels of pollution that the general population doesn’t appreciate. They need more energy, and energy translates into growth—economic growth. They’re deploying everything they have for energy. You wonder why other countries don’t do that.
X: What do those efforts look like? Is it better charging infrastructure for electric vehicles?
CLO: It’s charging infrastructure, and there’s innovation around deploying that in cities. It’s also policies. They have one where you can buy a [traditional, gasoline-run] car, but you have to enter into a lottery to buy it. You may win the opportunity to buy, but you can only drive it every other day in the streets. But with an electric car, you can drive it every day and it is immediately available. It’s very simple and worked really well.
X: How does the U.S. differ as an environment for cleantech?
CLO: Policy. It’s the lack of policy. In the U.S. and Europe, and India as far as we’re concerned. The lack of coordinated policy. You can say we’re oil independent and set a date. If we don’t move from that, the same innovation power that’s going [to China] to fulfill those goals would be here. If there’s not clarity around what that paradigm looks like, you have almost no access to capital.
X: Do you mean public capital?
CLO: I am very focused on how you grow a business. We have almost entirely private capital at this company. If the policies make it clear that you have a real market, the fastest and most efficient way of capital is private capital. The expectation is you grow a business and make it profitable. When you have political money you may have a lot of other obligations.
X: What has been the impact of government investments in cleantech companies?
CLO: We have no U.S. stimulus money in our company. So I’m not intimately familiar with the details. My observation is the push for cleantech is probably correct, but it was maybe a little fast in how it was put together. If the U.S. would have stuck to ‘we want this market to develop, here’s our 20-year vision for energy,’ the market will figure it out.
I still think that some of this stimulus will be put to good use. Whether they pick the right winners not, some of the proceeds will be picked up by others.
I believe in market efficiencies. I appreciate that they tried to do something quickly. People that tried to do it did the best they did with the tools they had.
What’s important is to recognize reality. The U.S. can decide to watch and see, or enjoy that game. I participated with a trip to Washington, D.C. with 65 other entrepreneurs. I think it was immensely clear that everyone is ready for energy policy and tax revision. My sincere hope is after the election is over, we will get to work on this.
X: What do you make of A123’s recent financial turmoil?
CLO: A123, of course, should answer their own questions. As an entrepreneur and innovator, I have a lot of respect for what they’ve done. They’ve done some things beautifully, and missed a few things. It’s hard for me to judge that. For us it worked really well to keep a lower profile. We developed a sense and a control inside the company: a do-it-right-immediately and obsessed-with-quality approach.
We’re not a household name. People in the industry know us; no one else knows us. I think we’re good with that. I focused the company on quality, cost reduction, and high performance early on.
I think it’s hard to go public before a market is ready. I am grateful to our investors for sticking by us.
We had a laser focus. We’re going to build something that works and think this through. We put together systems. We have real marquee customers that are really committed. Beijing Automotive is a really strategic player. They created an electric company as their executive arm. Part of what China is celebrating now with what they did right. They got big companies to invest in their vision. They’re building a business strategy on that policy.
Right now we’re the good guys and we like that. But it’s not all good. It’s up and down.
X: In December you mentioned that you were excited about your next opportunity. Can you talk more about what that will be?
CLO: I’ve been very focused [on Boston-Power]. It was more work than I thought, the transition. It’s been a lot of work actually. I will absolutely honor my year commitment, but I will not move to Beijing; I want to live in the U.S. right now because I think it’s the right thing for my family.
I think I will have the opportunity to do a lot of things. I’m going to finish this the right way. There will be no shortage of opportunities to use the knowledge and some of the insights I’ve gained to continue to help in more sustainable businesses.
X: So nothing new yet?
CLO: Not yet. I have a lot of ideas and opportunities, but I’m going to finish this right first.
X: What exactly does that look like?
CLO: I think it’s the transition of the leadership. It’s proven to be hard to hard to hire in China. It’s a huge country. We are in demand of the same type of talent [as other companies]: CEOs, engineers, and engineers out of school. But I’m fairly confident that we will have an executive team in place by the end of this year. It’s looking pretty good.