Wells Fargo Sponsors The Cleantech OpenPosted by Daniel Matteson at Wed Aug 17 10:40:00 +0000 2011
The nation’s biggest clean-technology competition finds entrepreneurs with big ideas for transforming their markets and creating jobs.
by Lisa E. Davis | Posted: August 14, 2011
Sometimes called the Academy Awards of clean technology, the Cleantech Open is a national competition between start-up companies that aims to “find, fund and foster” the best ideas in clean technology.
Since the first competition in 2006, the Cleantech Open has given out $5 million in cash and support to promising start-ups. These ventures have gone on to raise more than $300 million in outside funding and to create more than 2,500 jobs. These young companies are sparking innovation in energy efficiency, green building, renewable energy, transportation and other areas of clean tech.
For Executive Director Rex Northen, the key word in describing standout entrants is “disruptive.” The Open is looking for companies that will make an impact, he explains. “The Cleantech Open’s goal is to maximize the chances of an important, disruptive, environmentally sound technology succeeding in the market.”
That’s crucial, says Ashley Grosh, Project Manager for Environmental Affairs at Wells Fargo, which is a national sponsor. The United States, she says, is losing the cleantech race — and the jobs that go with it — to China and other countries. The Cleantech Open helps combat that. It “pulls from private-sector, venture-capital and private-equity dollars to support entrepreneurs that have these wonderful ideas, but they don’t have the resources and the marketing skills to commercialize.”
The big picture on cleantech
Global new investment in clean energy in 2010 rose 30 percent to $243 billion, according to Bloomberg New Energy Finance. The pace has slowed so far in 2011, but it seems clear that the future for clean technology is bright. In an Ernst & Young survey, 44 percent of executives say their companies expect to spend more than $50 million in 2011 on cleantech. Nearly 75 percent said their companies plan to increase their cleantech budgets between 2012 and 2014.
Cleantech isn’t riding a wave of hype, says Trish Fleming, Executive Director of MIT Enterprise Forum of Cambridge, a technology-entrepreneur network that assisted the Open’s start. “I think the ‘bubble’ mentality has left the industry, which is a good thing,” she says. “When you aren’t in a bubble, there are a lot of people willing to get down to the work of building really fabulous companies.”
Wells Fargo sees the opportunities and the relevance for itself and its clients. In addition to greening its own operations, Grosh says, it is also “working with customers to help them save energy and money, investing in renewable energy projects, as well as providing financial services for green business and clean-technology companies.”
In 2011, the Cleantech Open had fewer than 300 applicants. Every applicant got access to an extensive network of mentors around the country. Among those mentors were bankers, marketers and communications specialists from Wells Fargo.
The growth of the Cleantech Open
The Open got its start in Silicon Valley, when a group of successful entrepreneurs and businesspeople saw the demand rising for cleantech and wanted to make sure the best technologies won out. Every year the competition’s footprint has grown, from Silicon Valley to all of California to now seven regions covering 31 states.
While high tech tends to congregate in hubs, cleantech can come from anywhere, Northen says. New agricultural technologies are coming from the Midwest, advances in clean coal are coming from the Rust Belt and new energy ideas, particularly in oil, are coming from the Southwest.
In June 2011, the Cleantech Open announced its semifinalists. About half the 300 applicants made it to this level, an unusually high number owing to a strong field this year. The semifinalists — whose products range from biofuels to reusable dry-cleaning bags — attend training workshops and conferences in their regions, then hone their ideas, aiming to make it to the finals.
A Cleantech Open success story
Becoming a finalist was Jim Sanfilippo’s goal back in 2006. “I entered on a lark,” he says; he was just hoping to snag access to the valuable workshops. He was a film and television technician trying to develop a business around environmentally sustainable LED lighting fixtures. He’d been using LEDs for visual effects lighting for years, but with the advent of high-brightness LEDs and the exponential growth in efficiency and quality, he started to realize that LED lights had the potential to replace all traditional studio fixtures.
He wanted to tap that potentially huge market, but he didn’t have any business experience. He needed help and knew that at the very least he had a shot at accessing the Cleantech training workshops.
He got much more, however. His company, Altadena, Calif.–based Nila Inc., placed as runner-up in energy efficiency in 2006; in 2007, Nila entered again and won the category. “The networking involved was very instrumental,” Sanfilippo says. “They had individual mentors for legal patent work, business development, CFO types. Anyone I could get to and pull some information out of I was more than willing to do that.”
Less than two weeks after winning, Jim Sanfilippo found himself in London demonstrating his LED lights to the makers of the James Bond movie Quantum of Solace, who bought all the product he had, plus more.
What the Cleantech Open participants get
1. Big networking events. “One of the crucial things we realized,” Executive Director Northen says, “is that if you are going to put technology in the marketplace, people need to be aware of it.” The Open runs two major events a year, the National Investor Conference, which was held July 14, 2011, and the Global Forum, which will be held Nov. 10, 2011.
2. No business plan. This is the first year that the Open has told its companies to put their business plans aside. Says Northen, “We’ve long said we are not a business-plan competition but a competition that helps companies turn ideas into businesses.”
And, often times, early business plans fall apart once companies encounter the real world. “The Cleantech Open encourages companies to get out and talk to real customers early and make sure they test, validate and iterate, rather than get deeply involved in wordsmithing a plan.”
3. Training sessions big and small. The Cleantech Open gathers as many people together as possible, including mentors, in two academies — one on the East Coast and one on the West. “A very special dynamic goes on when you put a lot of people from different parts of the country together and put fantastic speakers on stage and have breakout sessions,” Northen says.
California selects six finalists, each in a different industry category. The other regions select three. The finalists, who receive $20,000 in cash and services, come together for the selection of regional winners, who receive an additional $10,000. The grand-prize winner will receive up to $250,000 in cash and services such as legal, marketing and channel distribution.
But as good as winning is, it may not be as important to most Cleantech Open companies as tapping into its rich network of contacts, even long after the competition has ended. The Open runs an investors’ forum, for example. Last year 72 investors sat at tables as alumni and semifinalists rotated through every seven minutes. “It’s like an investment speed-dating process,” Northen says.
A Cleantech Open founder sits on Nila’s board, says Jim Sanfilippo. And he regularly relies on Open contacts for advice. When he went to visit business prospects in Washington, D.C., well outside his Hollywood purview, he emailed his network for recommendations of whom else to call. Those calls led to others, and soon Nila was installing LED lights in committee rooms in the Senate office building and is in talks to replace the lights in the main Senate chamber.
“It’s great because I’m not an MBA. I’m doing this on the fly,” Sanfilippo says. “And with the help of this network of people, we have been able to grow. From our first shipment of product in 2008 to last year, we did over $1 million in revenue. This year, we are targeting $3 million in revenue.”
What the Cleantech Open is about, Northen says, “is understanding that entrepreneurs are the people who make a big difference. If you want to have a large number of jobs, if you want to see a shift in technology, then you need to support the entrepreneur. The entrepreneur is the engine for economic growth.”
Lisa E. Davis is a writer in Charlotte, N.C., specializing in business and finance topics.