While the slumping economy has delivered a gut shot to the CleanTech sector, many optimists are confident that a new wave of investment is coming. Even so, one must wade through a torrent of sobering news to arrive at such a conclusion.
A quick peak at recent headlines tell the story. Cleantech.com reported that venture investment in the CleanTech sector dropped 41 percent in 1Q09 compared to the last quarter. And Biofuels Digest has run a series of articles about highly regarded biofuel startups succumbing to market forces (here and here).
Amidst all the doom and gloom, the OPEN Forum ’09 conference treated entrepreneurs, venture capitalists, and policy professionals as well as job seekers and career changers to a breath of fresh air with their “Winning Tomorrow”-themed event. Taking place last Saturday in Mountain View, the conference boasted over 600 attendees and featured a compelling line-up of more than 60 speakers, with distinguished business leaders headlining as Keynotes. The scale of the event is made all the more impressive by the fact that it is organized entirely by volunteers. In its sixth year and one of Silicon Valley’s highly successful conference series, the event successfully exposes entrepreneurs to opportunities and provides insight and advice to the technology and business community.
The conference featured three keynote speeches: Warren Packard, Managing Director at Draper Fisher Jurvetson; Masood Jabbar, Former EVP Global Sales Operations at Sun Microsystems & Former President of Sun Microsystems Computer Division; and Tom Cambell, noted educator, economist, and candidate for California Governor. CleanTech-focused panel topics included:
- Investment Opportunities, Valuations & the Funding Gaps in Cleantech
- Innovations in Energy
- The Stimulus Act
- How Social Media is Shaping our World
- Entrepreneurship: Stabilizing Force in the World
- A Fistful of Dollars. the Good, the Bad and the Ugly of fundraising in a hostile environment.
Selected keynotes and panels are discussed below.
It’s Statistics and Probability…Stupid
The conference’s morning keynote speaker kicked things off with a healthy dose of enthusiasm and optimism. Warren Packard sang the praises of technology arguing that innovation has survived war, uncertainty, and worse economic uncertainty than we’re saddled with today.
His analysis turned on a three-part indictment of the educational system in the US, which included perspective, tools, and calculus. Perspective, he argued, is compromised by a heavy emphasis on Western Hemisphere-centric history and geography. Tools, like cursive, ignore the outgrowth of high-tech tools that demand typing proficiency. And finally, calculus, while powerful, is not useful in today’s business climate.
Statistics and probability, Packard argues, is the analytical tool most used by business leaders to assess the value of innovations to society. Statistics and probability demonstrate that technology will always drive exponential growth despite the worst economic crises. To illustrate this phenomenon, Packard turned to 100 years of innovation in the computational ability of machines. Each innovation follows a classic S curve pattern of slow initial growth, a fast market uptake, and eventual slowing down as the market becomes saturated with the technology. Stacking S curves on top of each other shows that technological innovations follow a pattern of exponential advancement or paradigm shifts on top of paradigm shifts.
The result is a pretty optimistic view of the future, which Packard describes as a blank slate…”simply fill it in.” The take away message: innovations will occur regardless of current market realities. Elaborating, Packard took the time to highlight many exciting technologies on the horizon and urged optimism despite current economic realities.
NASCAR and Stem Cells
It’s no secret by now that the federal government’s Stimulus package promises a hefty infusion of capital to spur the creation of a clean, green economy. This is perhaps the biggest reason to be enthusiastic about opportunities in the CleanTech sector in the coming years. While I have spent the past few months tracking DOE Stimulus funding announcements, I (like many) admit to losing a little of the initial enthusiasm stoked by February 13th’s ARRA signing.
Staying consistent with the OPEN Forum’s “Winning Tomorrow” theme, the Stimulus Act panel, titled The Impact of Government Policy on Cleantech Start-ups and their Investors, reminded attendees that only a small fraction of the $16.8 billion dedicated to CleanTech has been spent to date. The panel, led by New Cycle Capital’s Managing Partner, Josh Becker, included Matt Golden (CEO of Sustainable Spaces), Donnie Fowler (Principal at Fowler & Crumley), and Mark S. Ostrau (Partner at Fenwick & West). The point echoed among the panelists: not all Stimulus funding is created equal.
Mark Ostrau laid out a useful blueprint for developing strategy around Stimulus funds. He urged that applicants first identify which bucket of funds the technology fits into (e.g. Weatherization, State Energy Fund, Energy Efficiency and Conservation Block Grants, Smart Grid…). Ostrau advises that applicants then identify which stage of development their company is in since funding is available for companies at all stages. Once these preliminary steps are taken, applicants should monitor Grants.gov for funding announcements (these often are announced unexpectedly as was the case with ARPA-E). Ostrau also urged applicants to resolve any IP issues before pursuing grant awards.
Touching on the policy issues surrounding energy efficiency, Matt Golden stressed the importance of rating “home performance” to reduce residential energy consumption and mitigate the resulting GHG emissions. Golden is a necessary voice in the energy efficiency space. While he initially started out in solar, he quickly realized the low-cost gains that could be made with basic energy efficiency improvements in the home and started Sustainable Spaces to capture this market. While discussing available energy efficiency-related funding opportunities in the Stimulus (see Low-income Weatherization, SEP, and Conservation Block Grants), he made the important point that energy efficiency investments in the home finance solar installations by reducing the necessary capacity that needs to be purchased.
Donnie Fowler followed up with an informed analysis of the communication difficulties between CleanTech advocates and politicians. He drew on the topics of NASCAR and stem cells to drive the point home. In the both cases, Fowler noted that politicians respond most favorably to coalitions. NASCAR, for example, made waves by showing up in Washington to discuss ways they could reduce GHG emissions. Fowler noted, “People listen when NASCAR speaks.” Echoing Matt Golden’s discussion about forming an energy efficiency industry association to advocate in Washington, Fowler urged CleanTech entrepreneurs and venture capitalists to pressure local governments and agency executives to design innovative projects before the bulk of Stimulus funds is spent.
The Innovations in Energy panel touched on some of the challenges associated with transitioning to clean energy solutions. Led by moderator Tarek el Aguizy, Managing Partner at Emersus Energy, the panel included Stefan Heuer (President and CEO of Siemens Technology-To-Business Center), Tamin Pechet (Principal at Catamount Ventures), Corwin Hardham (CTO at Makani Power), and Rahul Prakash (CP of Biz Dev & Marketing at Virgance).
The panel highlighted some of the different approaches being taken to revolutionize the energy industry. Hardham, for example, called his company’s electricity-generating kite technology an “Apollo-like project” that turns on turning a big idea into a huge breakthrough. Prakash’s company, Virgance, takes a more grassroots approach to energy solutions by investing in organizations that combine activism with consumerism. For example, 1BOG, a residential solar aggregator of sorts, that promotes the widespread adoption of renewable energy and sustainable solutions through education, community building, and group purchasing programs.
Pechet and Heuer hit on some of the more fundamental changes taking place in the energy industry. Heuer acknowledged the convergence of demand and generation technologies capabilities for consumers. Pechet added that Smart Metering will open up not only the ability to monitor electricity consumption by consumers, but also the ability to take action to reduce utility bills. Pechet also pointed out the nexus of energy and water issues, pointing out that environmental realities require a comprehensive analysis of the downstream impacts of “clean” energy solutions (think biofuels).
The panel all agreed that prizes are useful tools for spurring innovation in the energy sector. For example, the X-Prize can promote large, breakthrough solutions while incentive-based solutions for consumers can nudge (to borrow the premise of the book by the same name) changes in demand and consumption.
OPEN Forum ’09 rightfully celebrated the power of ideas. Innovation, we learn, is inevitable and new technological breakthroughs will lead us out of our current economic slump. But more importantly, attendees were reminded that the convergence of economic, environmental, and energy realities require a comprehensive assessment of the value of innovative solutions. In the end, while technological breakthroughs may spur economic growth, the global community must also be taken into account.