Ahhh… sunny San Francisco. What an antidote to the cloudy and gray mess that has been Washington of late (as of this writing, 8pm before St. Patty’s Day: Really, DC – ANOTHER snowstorm??).
Oh the waving fronds of palm trees basking under the cerulean sky, the warm balmy touch of a bench as you take a seat on a rooftop garden, the view of the bay from the windows of a stately hotel perched on Nob Hill… there’s your backdrop.
On to the conference. Cleantech aficionados journeyed from far and near to convene at the Cleantech Forum, hosted by San Francisco-based Cleantech Group last week at the Fairmont Hotel. And despite all the brouhaha over VCs running away hand on hat from cleantech, hand-wringing over whether corporates or family firms can make up the difference, and whether or not all these worthy technologies can make it through the valley of death and emerge as stalwart components of our energy infrastructure, the attendees seemed to look past that, instead soaking up the effulgence of the setting, spouting visions of the second coming of cleantech.
And I don’t doubt them. The second coming of cleantech is nigh, they said (perhaps with a different wording…), and it won’t resemble the first time around. Whereas the first wave of cleantech was a misplaced bet on capital-time-and-regulation-intensive projects, with a number of them based in manufacturing – which unfortunately for the US, countries like China had down pat – this time the sector will be driven by innovation in business models, decentralization, and energy efficiency – much of which can easily be based in capital-light software and IT (not to say all of it will be capital-light).
Decentralization – from distributed solar, made possible by firms such as SolarCity, to crowdfunding for clean energy, exemplified by Mosaic – is the name of the new game in town. “Cleantech has left out perhaps our greatest asset – people,” said Mosaic founder Billy Parish. Other industries have long caught on to the “collaborative Internet”, with crowd-driven companies hitting it big, such as Airbnb (set to IPO somewhere in the $10 Bil vicinity), LendingClub, and Quirky (just completed $79M Series D round). However, cleantech hasn’t done a whole lot in this vein, said Parish. The Internet can crowdsource action to solve climate change, he said, which is the idea behind Mosaic.
Energy efficiency is also a hyped area of cleantech. I sat down with Abhay Gupta, CEO of energy disaggregation startup Bidgely. With Opower (which uses software to improve energy efficiency for utilities) set to IPO, the way is paved for second-wave energy efficiency startups like Bidgely. While Opower processes and delivers energy data at a system level, Bidgely breaks down energy data at the appliance level (basically, disaggregates it). So, it can tell you how much electricity your washing machine is using versus your stove, giving you (and utilities) an even more detailed look at power usage. (Now would I want to know that much detail about my home? Remains to be seen.) There is also the prospect of incorporating it into a ‘smart’ home: Left your stove on? Your utility will text you.
On the finance side, Colin le Duc of Generation Investment Management (founded by Al Gore and David Blood to fund sustainability companies) pointed out that cleantech is actually one of the best performing sectors in terms of the public markets, despite all the negative press, and solar in particular has shined. “The solar index is by far the best performing subsector index in the stock market in the last 12 months,” he said. His first guideline for cleantech investing is “Have faith.” And though investors may still be skittish about inputting heavy loads of time and capital into ventures, sometimes it’s necessary. Tesla took ten years of financing to get to where it is today, he reminded, and now it’s about a $30B company.
Much more was said at the conference, but alas I must go enjoy the view out my window of pelting snow and gray mushy streets while I can. I’ll end with a plug that relates to my last article about the ARPA-E conference, though this time it’s more about politics than financing. “I think we can’t continue to pretend that technology happens in a vacuum,” said hedge fund billionaire Tom Steyer. Cleantech and its advocates must be consistently making their presence known in Washington to forward their cause. And in the frank way of extremely wealthy keynote speakers, he quipped: “In business and politics, if you’re not at the table, you’re on the menu.”