Green Kingpins, Pt. 6: Alan Salzman of VantagePoint

“There’ s no cheap way to get to one gigawatt.”

Eric Wesoff April 23, 2010

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

Alan Salzman co-founded VantagePoint Venture Partners in 1996 and serves as CEO and Chair of the firm's Investment Committee. He's been involved with more than 300 companies and has held overall management responsibilities for a dozen venture funds with over $5 billion of committed capital. As CEO of VantagePoint, he oversees one of the country’s largest greentech investment teams, manages a portfolio of more than 25 greentech companies, and maintains strategic partnerships with a dozen companies focused on greentech commercialization.

VantagePoint started investing in greentech way back in 2002, and now has close to 20 people dedicated full-time to this sector.

Michael Kanellos and I interviewed Salzman in the VC firm's San Bruno office.

VantagePoint and Salzman warrant kingpin status because they think big and they think long-term. When the firm invested in BrightSource Energy, now a force in solar thermal power plants, they made sure they had the resources and the commitment from the start. They knew they'd need billions of dollars and immense industry partners and EPCs like Bechtel. Same with Better Place.

According to the VantagePoint CEO, their view is that the company has to scale: "there's no cheap way to get to one gigawatt." Salzman further emphasized the point by saying, "Show me a capital-light way of doing lighting."

In his words, VantagePoint's "distinguishing feature is a focus from startup to scale-up. You've got to commercialize or it doesn't matter." If you're going to take on the challenge of water reclamation or automotive transport, then "we've got to come at these projects with a healthy appreciation for just how big they are [. . .]. The end of the job is broad-scale deployment."

If it involves a physical product and you develop it on $5 million, "then you are a magician."

Salzman sees the VC investor causing seismic shifts and transformations in greentech industries. "We believe that the entire universe switches to electric vehicles. [. . .] Who wants the slow smoggy expensive version? We think EVs are cheaper to make. We think it all switches."

He remarked on the short time span it took to get from Tesla's initial efforts in EVs to the release of the $30,000 Leaf electric vehicle: "Three years from the first Tesla to a cheaper-than-Prius all-electric car."

Salzman sees this same transformation occurring in lighting, with everything switching out to solid-state lighting and causing "a $100 billion industry to flip." He suggested that it would be cheaper for a utility to give away solid-state light bulbs than to build out another gigawatt of capacity.

In his view, the mammoth lighting incumbents like Philips, GE and Osram "might catch up -- or might not."

"Then there are the big white spaces -- who are the leaders in energy storage? In advanced building materials? The leading water guys?"

Salzman said, "What I find annoying is that people think that moving to a low-carbon economy will be expensive. It's false thinking. Instead of being a burden, it's an investment that pays a positive ROI. How many people are killed in solar mining?" He expressed amazement that in 2010, humanity still cannot figure out a better way to boil water than digging coal out out of the ground and burning it.

Salzman concluded, "When these transformations occur, some incumbents 'get it' and thrive, some stick their heads in the sand and go away. Some new guys come on the scene, some of the big guys adapt, some go the way of the dinosaur."

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VantagePoint's portfolio of companies includes:

Adura Technologies -- lighting controls and automation
AlertMe -- home energy management
Amprius -- next generation li-ion batteries
Angstrom Power -- fuel cells for portable power
Better Place -- EV infrastructure, charge points, and EVs
BridgeLux -- LED lighting
BrightSource Energy -- solar thermal power plants
Chemrec AB -- paper pulp waste to fuel
Cobalt BioFuels -- biobutanol
FloDesign -- next-generation wind turbine
iWatt -- power ICs and LED drivers
Mascoma -- cellulosic ethanol
MiaSolé -- CIGS thin-film photovoltaics
Ostara -- recovering fertilizer from waste water
Premium Power Corporation -- Zinc-flow energy storage
Senergen -- depositing silane onto free form metallurgical grade silicon substrates made via thermal spraying (Shut down)
Serious Materials -- green building materials
SolarCentury -- EU-based solar integrator
Solazyme -- sugar-fed algae grown in the dark for green fuel and chemicals
SuperBulbs -- LED lights in an incandescent bulb package
Tendril -- home energy intelligence
Tesla Motors -- EV pioneer
Ze-gen -- converting landfill waste into syngas