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Blog Archive: February 2012

Cleantech vs. Retiring

Posted by John Martin at 5:00 PM, 02/14/2012
What do you do after the Super Bowl ? Head to … …
One of the repeating themes I find in this market space is seeing people who have been great winners in other ‘tech’ sectors, choosing their next career as ‘cleantech’. It’s like those old Disney ads, “now that you’ve won the Super Bowl, what’s next? Disneyland!”.

In this past year’s Cleantech Open, one of our National Finalists from Oregon was a renewable cellulosic coal-substitute venture led by a guy who had, 40 years earlier, pioneered a basic process for semiconductor wafer fabrication and then went on to found two different bio-technology ventures. What do you do for an encore after chips and genes ? Cleantech !

Similarly you saw this twice at the Idaho conference. Clay Young, CEO of Inovus founded a business intelligence database software venture in Idaho which he sold to Microsoft in 2006. Could’ve retired on that, but instead, Cleantech !

And Lloyd Mahaffey, CEO of Dynamis was an early employee of Apple Computer and was asked by Steve Jobs to do something with the idea of an “educational” market and turned Apple Education into the multi-billion dollar dominant player in the school computer market which it has become today. After that, he lived the life of a Silicon Valley venture capitalist for years. His family then made the lifestyle decision to move to Idaho in the mid-000s and he looked for new business projects. What seemed like the biggest play ? Cleantech !

Impatient shorts will bet on “the next Groupon”. But, the strong, patient money is going to what pundits consider the new strategic areas for the 21st Century -- energy and water (the core of Cleantech Open) as well as civic-security.
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Idaho Symposium Presenters

Posted by John Martin at 5:30 PM, 02/14/2012
Dynamis Energy, Meridian
IVUS Energy Innovations, Moscow
Inovus Solar, Boise
Power Engineers, Hailey
US Geothermal, Boise
FDJ Engineering, Boise
Site Based Energy, Hailey
Critigen, Boise
SmartDwell, Boise

Waste-to-Energy-----------
Dynamis Energy of suburban Boise has an impressive story about a more complete combustion of rubbish than “incineration”, which CEO Lloyd Mahaffey considers versions 1 and 2 of W2E.

Dynamis’s alleged “version 3” is what they describe as a starved air gasification process, which thermally converts waste products into a combustible gas, actively mitigating many potential emissions. With additional thermal recovery equipment, they can generate power in multiples of 5, 10, or 20 megawatts of electricity for small communities. They claim they can document a wider spectrum of municipal solid waste types successfully consumed than any other process in the world, including TIRES, auto "fluff", and medical waste, each one a huge civic challenge.

One of the clever developments of Dynamis is a highly modular design which, in addition to bespoke built-in-place systems, has been ‘miniaturized’ into a version that fits within a standard ocean-shipping container, the so-called Twenty-foot Equivalent Unit or TEU. This allows the gasification unit to, among other things, be trucked or shipped around as a gypsy garbage disposal, hot water generation and power creation for remote missions, rural farm communities and small islands.

Ultracapacitors and Total System Design-----------
IVUS Energy Innovations had its genesis in engineering students brainstorming at the University of Idaho, and remains headquartered and growing in Moscow. The core element is the ultracapacitor - an energy storage module analogous to “batteries” but with very different characteristics. It’s key attractant is the ability to recharge in seconds rather than hours. But they tend to store less total energy and have unsteady voltage through discharge.

IVUS’s clever twist was this: instead of trying to contort an ultracapacitor to be more like a battery, they took a total-system-design approach to a routine product/usage scenario (the flashlight) to adapt it to ultracapacitors’s strengths and weaknesses.

They took high-efficiency LEDs to avoid needing the gross energy reserve of regular batteries. And they designed circuitry to offset the voltage drop. With a standard flashlight, one would need three-dozen-or-more ultracaps to provide the end-usage-service of 1 battery. The re-imagined IVUS system had an ultracap ratio of only 3:1 compared to regular batteries in a regular flashlight. That put them within field-goal range because one can tolerate a lower endurance time if re-charging can be accomplished in mere-minutes (while making a cup of coffee or draining the last one) so the customer usage-impression would be one of perpetual availability.

They also aimed at the public safety market which would put a premium value the near-perpetual availability and fast turnaround, vs. the price-sensitive consumer market. And their go-to-market decision was to license a public-safety specialty vendor rather than be an OEM.

Convergent System for Solar Lighting------------------
Inovus Solar sells solar-powered street-lights, allowing roadway illumination to go off-grid where desirable or urgently necessary. As with IVUS (unrelated despite the commonality of spelling), their strength is leveraging a series of capabilities unavailable just a few years ago
● the increased efficiency of thin-film photovoltaics (allowing vertical pole-mounting)
● the increased efficiency of batteries, allowing sufficient energy to be stored within the pole
● the increased efficiency of LED lighting, requiring less storage and less sun conversion per lumen

Strength in Engineering Service Firms-----------
Power Engineers is an international leader in industrial control systems, power grid and geothermal engineering with engineering centers all over the nation and based near Sun Valley in the center of the State. They have recently enjoyed dramatic growth, entering the top-100 of all engineering firms only in 2006 and now on the cusp of entering the top-50 this year or next.

US Geothermal is a full-fledged developer and utility, designing, building and operating geothermal projects that sell wholesale power in s. Idaho, e. Oregon and n. Nevada

FDJ Engineering’s practice includes a wide range of built-environment efficiency evaluation, monitoring and design services.

Site Based Energy, founded by some original partners at Power Engineers, and also based near Sun Valley, who I shall roughly and incompletely describe as “the McKinstry of agriculture”, focusing on efficiency engineering for agricultural operations, not only in Idaho, but increasingly nationwide and around the world, as well as commercial and urban projects.

Critigen is a former division of CH2MHill which develops ‘smart’ information systems for water and geological processing facilities

Green Buildings and Smart Grid-----------
Two good pitches, showing Idaho is right in the thick of smart building developments. The University of Idaho has their building design lab in the city of Boise (link). Lab Director Kevin van den Wymelenberg spoke on their research into the holy grail of intelligent energy management toolsets and user interfaces, sensors meshes and the rest, and their practical collaborations with architects and building owner-developers throughout the intermountain West regarding development of metering-monitoring-telemetry schemas for more efficient, lower cost, healthier buildings in line with the milestones of the Architecture 2030 carbon-neutral built-environment challenge program.

Then, Steve Taylor of brand-new Boise start-up SMARTdwell discussed a very clever variation of the ubiquitous “energy dashboard”, a type of residential extension of the work Kevin’s U-of-I lab is doing for commercial buidlings. SMARTdwell intends to provide in an iPad-like format, a complete “owner’s manuals” for homes. Most people, when they buy a house, are intimately familiar with the marble and granite finishes in the powder room, but could not tell you where the water cut-off, furnace filters or circuit breakers are to save their lives (which such knowledge often can !)

Conversely, every car, tractor, flat-screen monitor and washer/dryer come with a complete illustrated “owner’s manual”. Why not the house (or building) itself?

SMARTdwell’s idea is to combine basic diagrams, fact sheets and FAQs with energy audits, reports, variable pricing, green-ness of energy inputs, calculators, links, and instructional media in a manner that would pull together in a single UI the equivalent of existing paper instruction manuals, one dimensional energy calculators, single featured appliances and home area networks.
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Idaho Energy Community – February Symposium

Posted by John Martin at 6:00 PM, 02/14/2012
There are few more optimistic phrases in the English language than “First Annual” (the audacity!) and among the top-five has to be “Second Annual” (the ambition!). But participating in a first- or second-annual feels like you’re really “in on the ground floor” of something and that’s how it was this past week at the 2nd Annual Idaho Energy Symposium in Boise, mounted by some equally young and audacious new catalysts in the Idaho market.

Only in 2010 was a statewide technology-sector trade-association created in Idaho analogous to the Colorado Tech Assc., Tech Council of Southern California, Washington Tech Industries Assc., and so forth. This new Idaho Technology Council (ITC) really filled a vacuum, evidenced by its rapid uptake in membership and program participation. They’ve naturally divided into SIGs, one for software, like Washington’s original WSA, and one for life sciences like the WBBA. Happily, there is a 3rd SIG – the ITC Energy Consortium who co-hosted of this 2nd Annual Symposium. Emergence of ITC/EC, like that of the Ohio Clean Economy Council, Chicago Clean Energy Trust and Washington Clean Technology Alliance, shows that ‘cleantech’ is not just a fluke, boondoggle or passing fugue, but is seen by a spectrum of hard-nosed capitalists as FUNDAMENTAL to America’s economic future.

The other co-host was a new joint-venture between Idaho’s state university system and the Department of Energy termed the Center for Advanced Energy Studies, or CAES, based out of a new 55,000ft2 state-of-the-art research complex in Idaho Falls that just opened in late 2009 literally across the tracks from the DoE’s Idaho National Laboratory (INL), but with seconded researchers on each of the university campuses.

It seems, indeed, “there is a tide in the affairs of men”, when you consider that between ’008 and ‘010
·  UW Enviro Innovation Challenge    ·  WSU Imagine Tomorrow for high-school    ·  Oregon BEST and BESTFest   
·  Pivotal Leaders program    ·  new energy programs at WSU-TriCities    ·  Northwest Energy Angels   
·  WA Clean Technology Alliance    ·  Cleantech Open Northwest    ·  Cleantech Open Rocky Mountain   
·  Idaho Technology Council    ·  Idaho-CAES   
·  Spokane CLEEN | NW    ·  Mid-Columbia Energy Initiative   

all got started or gained critical momentum. While perhaps not quite Chrysler’s “halftime in America” certainly there’s been a buzzer on the court -- and a new “period” of the Northwest’s game is underway for the 20-teens.

Over a day and a half the Symposium presented an array of local businesses both established and emergent, and researchers from each of Idaho State University in Pocatello, Boise State University and the University of Idaho in Moscow and Boise – DoE’s partners in CAES.

The research and business presentations covered an array of ‘cleantech’ from smart buildings and engineered lighting and power storage to waste-to-energy schemes and grid engineering (see sideblog).

In any energy-frontiers event, two topics which will be special distinctions for Idaho are PROFESSIONAL SYSTEMS ENGINEERING and NUCLEAR.

Engineering Services -------
While we all like to focus on startup activity as a measure of prowess, equally important in a field like energy and environment are professional system-engineering providers, an area of historic strength in Idaho. As much a bedrock of Idaho as potatoes and mining was the global engineering firm Morrison Knudsen which started its first job exactly 100 years ago, and undertook everything from Hoover Dam and Vehicle Assembly Building at Cape Canaveral to the Chunnel and portions of the transAlaska pipeline. Even as MK got merged and purged towards the end of the 20th century, the culture of global engineering was firmly rooted in Idaho and spawned many strong professional service practices including these attending this conference:
         Power Engineers     US Geothermal     FDJ Engineering   
         Site Based Energy     Critigen   

Included in this group should also be the main public utility in the state, Idaho Power Co. While the Columbia and Tennessee dams and much of Canadian hydro has been government funded, IPC built their Hells Canyon facilities on their own and they remain the largest privately-owned hydro complex in North America. And now IPC is one of few or any other utility to have nearly its entire (99+%) customer base on smart metering devices. The final connections were made in December, and while other utilities have demos - and IPC’s service population around 500,000 is modest -- it is surely one of the most comprehensive roll-outs in the US.

One factoid: those new meters take measurements about once an hour (totaling 26 times per day) compared to once a month ‘meter-readings’, that means IPC has gone from about 500,000 data points per month to about 400-million per month ! Bring in the data miners !! Idaho Power is also starting to roll-out dashboard services to those customers allowing a variety of tracking metrics viewed on a rolling 48-72 hour basis and eventually in real-time!

Interestingly, IPC said that its state regulators helped move it towards an all-smart-metered grid. Some states see their utility commission as a drag on innovation, but it would appear Idaho is fortunate in its regulators, who have helped Idaho Power have one of the smartest grids in the country.

Nuclear-------
While WA’s Hanford site was more involved with military apps, the following quote is fairly accurate that "The history of nuclear energy for peaceful application has principally been written in Idaho."

That writing was done at the Idaho National Laboratory at the eastern end of the state. The tiny hamlet of Arco, ID was the first in the world to get 100% of its daily electricity from nuclear. Also, interesting as being in the middle of the desert/prairie, INL is a major NAVY site -- having pioneered much of the development of nuclear drivetrains for SUBMARINES. This electromotive expertise has now led INL to be a major DoE site for developing technical standards for electric CARS.

So many reactor variations have been built and tested at INL (and most now decommissioned) that the desert west of Idaho Falls holds allegedly the largest concentration of reactors on the planet. One impressive entrepreneurship story from this engineering heritage is Premier Technology, Inc. in Blackfoot, ID. Their CEO and Founder Doug Sayer made two presentations at this conference. PTI is one of the ‘premier’ global experts in specialized hardware fabrication for the nuclear power industry. Through a strategy of avoiding outsourcing and close-holding their craft skills, intellectual property and equity capital they have bootstrapped sweat and a small cash stake into a >$75-million manufacturing center of excellence covering a variety of energy and commercial industries.

Despite our love of software, and it’s critical role in efficiency systems, a great of deal energy, water and other ‘cleantech’ still involves A LOT of metal-bending and literally cutting-edge manufacturing skills, much more than recent booms in info-tech and then bio-tech. Cleantech brings us back full-circle to hard-core manufacturing and, if good high-efficiency vehicles can now be “Imported from Detroit™”, it’s also good to know that power engineers worldwide are getting their high-grade metallurgical machining and manufacturing "Imported from Idaho".

Manufacturing and ENGINEERING are two sides of the same coin and in the nuclear field, as in the utility grid generally, a disturbing supermajority of nuclear engineers will achieve retirement age during the 20-teens, creating urgency for training a new generation, along with an opportunity given that we’re at a real inflection point of new nuclear designs -- pebble-bed, small-modular-reactors (SMR), pump-less systems and so forth. This need and the response regarding nuclear education was discussed by Jason Harris, a professor at Idaho State University in Pocatello, along the same I-15 corridor as INL and Premier Technology. Nearly a decade ago, the total number of nuclear engineering students in Idaho was 2 or 3 dozen. Today there are nearly 300 in Idaho’s colleges and another 100 or so in related fields such as Physics. Given that the largest nuclear student cohort in North America is around 400 at Texas A&M (who knew?) that places Idaho in the forefront of nuclear workforce development in this hemisphere.

Disruptive Ideas-------
Discussion of the research and business is in this separate entry (see link). I’ll conclude this entry with comments from the luncheon keynote by John Gardner, Director of the Efficiency Institute of CAES at Boise State U., Dr. Gardner proposed that less often are there truly disruptive technologies or chemistries, but more often disruptive IDEAS. Neither Henry Ford nor Steve Jobs really pioneered fundamental new science, but had hugely impactful ideas – about simplicity and accessibility, services and design. He suggested that, barring the unknown unknown, no real mass\energy ‘breakthroughs’ (e.g. cold fusion) seem likely in our lifetimes, so what may be instead be truly disruptive are new IDEAS ABOUT energy.

One of those may be that while we’ve long focused on acquiring CHEAP energy (lower prices every day), there is evidence of an increasing MARKET PERCEPTION that -- not all energy is the same, some is SMARTER and some is BETTER and not all consumption is the same, some is SMARTER and some is BETTER

That is, while previous energy markets may have been, or been seen as, an un-differentiated contest of joules, energy markets are starting to differentiate and de-commoditize in the same way as clothing, cars, furniture and other markets -- some will just demand cheap, others will seek out more “value-added” consumption models. And where there is differentiated demand and support for value-added, product, market and transaction innovation can flourish.

Interestingly, the following week, an article came out in MIT Sloan Management Review about the dramatically increasing number of corporations explicitly citing “sustainability” as a corporate priority.
              • In a survey, 70% said it emerged on their agenda in the past 6 years
                                20% said it emerged just in the past 2 years
It’s main point was that this is no longer about “greenwashing”, but that discretionary consumer demand for “smarter”, “better” products is driving part of this and that another part is driven by cold, hard, calculus that sustainability is proving to increase profitability.

He also offered a separate and engineering-related comment that was quite provocative. Which was to simply remember that every energy storage device is, implicitly, a BOMB. Pent-up energy in a compact space. Released suddenly and without control, that’d be the basic definition of an explosion. I’ve long thought that in some distant, all-electric-transport future, our grandchildren will marvel that we all drove around in Molotov cocktails and parked hundreds of ‘bombs’ under skyscrapers each day. So when you worry about the Chevy Volt, or putting a fuel cell under your patio/deck, just remember those explosive devices which sit in your garages each night, and surround you daily on the gridlocked freeway. Certainly food for thought !

And there was much food for thought and excellent “plugging in” at this conference which the local community had the audacity to call “Second Annual”. It's also always interesting to see how people successful in other fields are drawn into the cleantech field (see sideblog).

Two data points make a tradition, so I look forward to the now-traditional Idaho Energy gathering next winter. Having these strong new organizing catalysts of ITC and CAES will certainly help draw global attention to the strong pool of innovation growing in Idaho.
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Presenting Ventures: Spokane 2/15

Posted by John Martin at 6:00 AM, 02/22/2012
Flyback Energy, SpokaneValley
Illinois Clean Fuels, White Salmon/Bingen WA
AgEnergy, Spokane/Pullman
Gasohol Systems Technologies, Coeur d'Alene ID
The first presentation by the suburban Spokane company Flyback Energy, Inc. was a great exemplar of several strategic points. First, great business opportunities often come from reprising the old advertising slogan of "not making the products you buy, but making the products you buy better". Components can be a good business. Energy saving retrofit equipment and high value components are a great businesses. Second, we often seek to have less of a desirable output like light, heat, electromotive force because we simply accept what it consumes, when a better question can be -- why should that consumption level be a 'given' ?

FE applies sophisticated and complex electronic switching to address the 'given' that the electromagnetic systems driving lighting ballasts and electric motors -- technically called "inductive loads" -- will always waste a certain amount of energy through the voltage flux of their magnetic fields. If you can significantly recover those heat and EMF losses, the energy savings potential is huge. Inductive loads are all around us and the savings are claimed to be significant. I won't attempt an engineering précis here but will refer you, as a warm-up, to check out these Wikipedia entries on flyback convertersbuck-boost converters, and flyback transformers, so, the company's name is based on technical terms, not some anime reference or other.

John Overby, Flyback's CEO gave the pitch. FE’s technology has been in development for years and took advantage of the venture acceleration services of the Spokane Intercollegiate Research Technology Institute (SIRTI)*, where Mr. Overby was a client services Director and senior advisor. As often happens in professional service engagements, Flyback liked John so much, they decided to hire him. And John was sufficiently impressed with the market potential that, 1 year ago, he accepted the CEO position.
*now recast as the statewide agency “Innovate Washington”.

A few quick notes. First, Flyback sees potential to have their widget "applied to every inductive load in the world" by using a four tier business model strategy. But they are taking a wise step-by-step invasion plan that someday, when fully disclosed, I am confident will make an excellent case study.

Secondly, they've decided their first beachhead will be in commercial lighting. That was partly affected by there being a complementary and innovative luminaire engineering company right in Spokane with whom they can partner - Eco-Lite. In these venture forums, one often sees multiple start-ups that, in the old romantic phrase, seem to "complete each other", yet it's frustrating that more of them don't team up to make common cause. It's gratifying to see a good partnership enacted, where Flyback is working with Ecolite in a spare warehouse they're dubbing "EcoLab" to optimize lighting, motor and mini-grid applications. And it's great that they did not even have to leave Spokane County to find each other !

Bio-energy generation-----------
Flyback is part of a long tradition of electro-mechanical manufacturing in the Spokane region from Itron and ReliOn to Schweitzer Engineering. The other natural lynchpin of Inland NW business is biomass (agriculture and forestry), so it's stands to reason that the other 3 ventures presenting to this CLEEN | NW forum all had to do with turning biomass into energy.

From west to east we started with Stephen Johnson's company, currently billed as “Illinois Clean Fuels” –ICF- due to a facility siting, but headquartered in the Columbia Gorge twin-villages of White Salmon and Bingen in Klickitat County, WA, most famously home to the Boeing-acquired InSitu Corporation, a leading engineer and producer of those pilotless drones so much in the news today, also across the river from the wind-surfing mecca of Hood River, OR.

Next we heard from Philip Appel's venture, AgEnergy Products LLC, with operations in Spokane. Both Johnson's and Dr. Appel's companies are developing variations of biomass gasification, generally analogous to Dynamis Energy of Idaho which I heard present earlier February in Boise -- all three are very different from 20th century “incineration” which is more raw combustion than complete chemical breakdowns and conversions into safer, basic elements.

AgEnergy and Dynamis both use the outputs of their gasification processes to drive attached generators to provide electricity to be independent of, or augment, a power grid. ICF is using theirs to fuel a Fischer-Tropsch process to generate liquids that can be direct substitutes for high-density fuels from diesel to aviation. ICF’s process uses coal as an initial feedstock mixed with agricultural biomass and combined with deep-earth-injection carbon-sequestration - primarily because of the cost-effective availability of coal and the lack (so far) of a deep biomass supply chain. As that supply-chain evolves, they can shift, within their existing technology, to an entirely biomass-fed process – their firm long-term goal.

ICF will base its processing facilities on technology used for over half-a-century in South Africa at the world's largest commercial-scale coal-to-liquid-fuel plant: SASOL.      And ICF has retained as their Technology Director the former head of technical operations for that SASOL facility !      Johnson, the founder, is a former hedge fund manager from Portland (hence the Gorge business site) and probably the lead strength of ICF’s pitch is his own knowledge in navigating the finance labyrinth necessary to build large scale manufacturing facilities. Johnson would say their lead strength is being competitive with petroleum down to $35/bbl with a claim of producing his fuel for $1.25/gallon.    Stay tuned.

While Dynamis in Idaho is focused on municipal rubbish as the raw input to thence generate electricity, Dr. Appel's AgEnergy uses farm-biomass waste, primarily after-harvest stubble or field residue. AgEnergy has miniaturized their gasification/generation equipment to fit a twenty-foot container unit (TEU) to enable their product to move seasonally to the high bio-mass fields. Dynamis prepares both TEU-scale and larger fixed facilities, while ICF is doing only very large fixed facilities because of the scale-economies needed for Fischer-Tropsch.

Dynamis looks at a variety of end-users. True to it’s name, AgEnergy LLC is focused solely on the farm market, especially, those with forced irrigation, where such irrigation pumping alone accounts for 15% to 25% of the farm’s operating budget. Off-season, the power would be sold back to a grid eager to offset urban loads - unlike earlier eras when utilities coveted selling power to farms.

It turns out that consuming the residue or stubble has secondary "sustainabiilty" impacts. Modern grain crops produce more biomass than the soil can breakdown in a single season by sometimes 5x! Plowing all that back into soil actually requires additional tons of nitrogen fertilizer to accelerate the natural breakdown process. By shaving off the bio-mass for AgEnergy's power generator, farmers can reduce 4-6 tillage passes (average) at about $15 per pass per acre savings. And they can also reduce nitrogen fertilizer both a cost and environmental savings.

The traditional method of dealing with excess bio-mass is burn-off, which authorities have mostly banned for sound environmental reasons. AgEnergy's system gives farmers:
  • a legal way to "combust" the straw
  • reduce tractor fuel
  • reduce fertilizer expense
  • reduce irrigation expense
  • make money on off-season grid sellback
AgEnergy's financial model includes sharing of savings and grid-sellback with the farmers, an increasingly cited method for lowering acceptance barriers for cleantech, recently popularized by the success of the Seattle efficiency engineering firm McKinstry.

And finally, we heard from two rocket scientists (literally), Pablo Diaz and Don Law who are now based in Coeur d'Alene, Idaho and who have developed a new strain of the tropical grass SORGHUM which can survive and prosper in cold, northern climates like... ... the inland Northwest.

sorghum can be
  • a good feedstock for biofuel refineries
  • is not nutritional  and
  • this northern strain would often grow where no other crops would be placed
so it avoids all of the food-substition issues. Stephen's and Philip's companies have already been through one round of angel funding and are looking for additional tranches. Diaz and Law's venture is earlier stage and just starting to seek out fuel-processing demos of its new strain of sorghum.
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CLEEN | NW in Spokane: 2/15

Posted by John Martin at 7:10 AM, 02/22/2012
Since the launch of Northwest Cleantech Open in 2009, the Greater Spokane Incorporated commerce chamber for the inland Northwest has been a close partner and liaison. Just the prior year, a new cleantech interest group called CLEEN | NW [Consortium of Leading Energy Efficiency Northwest companies] was launched by the GSI chamber and cleantech leaders including the regional utility - AVISTA, engineering firms CH2MHill and McKinstry, and local service providers and government agencies.

Last year, CLEEN | NW lead a major SWOT analysis project with local workforce development groups and State "innovation partnership zones" to focus efforts to further cultivate cleantech businesses in the inland Northwest. This was published in Q3.2011 and showed that, as we've seen in CLEANTECH OPEN, earlier business success is being found in efficiency ventures as compared to renewable fuels and that related areas of sustainable design and both smart home and smart farm held great promise.

Another conclusion was that, as always, good ventures had been sprouting up but that stronger, deeper efforts to foster and fund those companies were needed. CTO is one mechanism for doing that, so to start off the calendar year and our 4th competition season, CLEEN | NW and Cleantech Open jointly presented a "Find, Fund, Foster" program including a superb panel of regional financers and businessmen from Spokane, Portland and Seattle (below) and pitches by 4 showcase Inland NW energy ventures (sideblog). Cleantech Open's Regional Director, Byron McCann of Northwest Energy Angels and GSI's Technology Industry Economic Development Manager, Gary Mallon, were joint moderators.

The panel in the first half was direct, practical and pragmatic in its focus on the usual BUT EVER VITAL entrepreneurial fitness advice: really have your (stuff) together, know your market and your team, and have a sound, profitable, capitalist business model assuming no interventions or premiums. Panelists included
  • Scott Broder of the Inland Technology Start Fund
  • Tom Simpson, a Spokane-based angel investor
  • Brad Zenger, partner in Pivotal Investments of Portland (supporter of Cleantech Open)
  • Dave Curry, serial entrepreneur, currently leading the successful Demand Energy Networks of Spokane
  • Josh diLuciano of AVISTA, a founding sponsor of Cleantech Open NW and CLEEN | NW, testifying to the perspective of regulated utilities.
Both the financiers and several of the presenting ventures emphasized that cleantech success today is won by traditional customer cost-savings. In response to a question about sustainability certifications like the B-corporation as well as the role of so-called "impact investing" (a variation on “social responsibility investing”), the panelists all nixed those as superfluous and perhaps a taking of the eye off the ball of superior returns. They said that while the occasional inspired investor might get off on either of those, the overwhelming base of investment capital will simply cut to the chase and look at the numbers, not at how organic or free-range they are. Not what some in the audience wanted to hear, but hard realities nonetheless.

This puts to mind a quote from, I believe, pundit Michael Shellenberger that "PCs and office-software did not take over the workplace in the 80s because of a typewriter sequestration mandate", -- they just worked better at a good price, and that's what cleantech needs to be and, increasingly, CAN BE..

This is at variance with a researcher speaking earlier in Idaho suggesting energy markets were becoming differentiated like most other goods, with Wal-Mart, Nordstrom and Bergdorf demand tiers (my terms). These more battle-scarred financiers agreed that, especially COMMERCIAL, customers will opt for green but not for 1¢ less on their bottom line. Note below this is DIFFERENT from raw cost-per-joule.

There was a good back-n-forth about what exactly CLEANTECH is and is not. The first thing it’s not is Groupon or Facebook. Unfortunately, typical entrepreneurial funding analysis in north America focuses on the "Bay Area venture capital" model for which most commerce in society is very UNsuited. Further, as Josh D’ago of Avista, Spokane utility and Cleantech Open sponsor, noted, markets underlying many “cleantech” segments are deeply fundamental, pervasive and pre-historic – nutrition, light/heat, shelter – and thus have multi-generation infrastructure, deeply entrenched supply-chains, reluctance to change, and are often highly regulated as cornerstones of the fundamental social order. Thus, “cleantech” suffers an IMPEDENCE MISMATCH. Unlike the internet or fashion, where innovation can be taken up almost overnight, utilities, transport firms, farms, real-estate, etc., through no fault and intrinsically, CANNOT adopt AS FAST AS our society can INNOVATE.

Brad Zenger of Portland-based Pivotal Investments also noted that the term CLEANTECH ITSELF really is a misnomer. As with “dot-com” and “nano” previously, “clean” is not a separate market but an element or flavor to many existing segments which each have their own disparate dynamics. Speakers agreed that, more than novel widgets, a cleantech venture and its resolution of IMPENDENCE MISMATCH is often about changing the ECONOMICS around resource productivity, about financial and go-to-market innovations more than engineering. While cost-per-joule may or may not be higher, total savings or new earnings, combined with capital-conserving financing will drive success. Several examples were given around revenue-sharing installation amortizations, similar to the business model which is the cornerstone of regional poster-child McKinstry’s success.

Because cleantech is often slow, complex, generational and regulated - panelists repeatedly emphasized the need to think long, hard, deep, thoroughly, and "10 steps ahead", as to the milestones and scale of capitalization actually needed to get to ‘general release’. Also the need to accept and plan for the raw fact that reservoirs of capital outside Boston and SF, including Seattle but certainly markets like Spokane, Boise or Portland, IS VERY-LIMITED and ventures get STRANDED right at the goal-line, if they OUTGROW their home market and have not socialized their venture further away. Thus capitalization is another aspect where you may start local, but must THINK GLOBAL.

This was, of course, a panel of financiers -- so the discussion did not delve into social and climate trends, influencing markets or molecular science. I think it was Dave Broder who cautioned sternly that whatever business you thought you started (footprints, lifestyles, socialization), once you TAKE OTHER PEOPLE's MONEY you're SOLE BUSINESS BECOMES GETTING THEIR CASH BACK. While absent the extremities of loans from a shark or the mob, but only just this side of that, when you miss milestones or paybacks a great deal of ugly pain ensues and heads (figuratively at least) do roll and quickly. (Many good scars revealed on the panel, I'll save time and not elaborate) So, rather than visionary futurism (in a question on dos-and-donts, Zenger’s was “don’t be a ‘promoter’”), entrepreneurship is always only about greenbacks. Earning the chance to take other’s money, or being flagged as likely to get that chance by the Cleantech Open competition, is less a matter of periodic tables than cap tables.

This panel emphasized a well-known but valid chestnut about wringing as much risk out of a venture as possible before you approach institutional capital. That the technology works, the market exists and there’s some evidence of customer traction should be as known as possible. As one panelist noted, “you want to minimize the number of times I need to hit the ‘I believe’ button” (i.e. take on faith), suggesting that an investor is only going to hit that button once or twice in a venture pitch.   Probably if needed 3 times you’re out.

Entrepreneurs should take sacredly those REPRESENTATIONS and WARRANTS on which pledge their pound of flesh, for it may come to that surgery, and their team should be tough, resilient and highly agile to pivot early and as many times as needed to promptly tap a solid vein of revenue. In short, entrepreneurship is always focused on genuine CONSERVATION of RESOURCES, so the best cleantech should do well because it uses less, wastes less, repurposes more to a market-valued return, etc.    What could be cleaner?
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