In the last couple of posts we first looked over the past 15 years of cleantech venture capital, and then we looked at the various ways to generate VC-type returns in the sector -- and concluded that some of those models are being over-applied and others are being under-applied.
Within the sector, I'm starting to see some investors who get this kind of thinking and are building new types of efforts accordingly.
This harkens back to some of what I laid out a while back in my presentation "Cleantech Venture Capital in 2015," particularly the theme-driven builders and the "lean cleantech" players. We're now starting to see them emerge.
Here are a few examples I've noticed and am tracking:
1. Scott MacDonald and Whitney Rockley are two long-time veterans of the cleantech venture sector, and it appears they're launching a new effort they're calling McRock Capital. And given their backgrounds, it's interesting to hear they're really focusing in on one particular area within the sector, which they're calling "Intelligent Infrastructure." Basically, the sensors and M2M communications to make things like the smart grid and such work effectively. They are focused on building companies that make existing assets in established industries smarter. It’s about smart data and smarter systems. They are taking advantage of the data tsunami that is already migrating into established industry. These companies are scalable and capital-light. These two both were investors in RuggedCom, which was one of the early success examples of this kind of opportunity, so it's interesting to see them doubling down and focusing on a particular theme like this. And, per the last column, you can see how such investments can become standards and enjoy some positive network externalities when they work well.
2. Spring Ventures, led by Sunil Paul and Nick Allen, have been championing a "cleanweb" trend recently. If you haven't seen Sunil's slides from SXSW, it's worth checking them out, although they lose something without his voiceover, I'm guessing. But the "cleanweb" concept is pretty interesting, in that many of its examples speak to the lack of good channels in cleantech and seek to address them. Some of the cleanweb examples out there are a bit too "webby" for me, but then again I'm a curmudgeon when it comes to such things, and I'm open to being wrong on that point. I admit, when I first heard of Zappos, I thought it was a terrible idea, for example, so I'm eager to see how this develops. Certainly the recent wave of "cleanweb hackathons" have impressively brought out a lot of entrepreneurial passion among the web crowd that needs to be brought into the cleantech sector, and we're looking forward to doing one here in Boston soon.
3. It sure seems like the cleantech investment universe is starting to shift towards a place where SJF Ventures has been for a while now. The firm has been investing in tech-enabled services in the cleantech sector, and avoiding capital intensity and upstream techs. It turns out that SJF Ventures has been able to generate some pretty decent returns while doing so, even though it hasn't gotten nearly the attention heaped on the bigger-named investors who are throwing a lot more capital at the "next big patent."
4. Among investors who are going to continue to invest in proprietary technologies at early stages, they'll need to have some kind of special access to innovations and a strong focus on capital efficiency, particularly during the early stages of their investments. Along these lines, I've really enjoyed getting to work with the Israel Cleantech Ventures team as an LP. As specialists in Israel, they see everything in that innovation-rich region. And I've watched as the team has carefully cultivated their bets to help them get to critical proof points without requiring nearly as much capital as such efforts seem to require in other more heavily-invested regions. This is an example of theme-driven builders of a geographic type.
Will these efforts succeed? I can't say. But I'm watching them all with interest, as efforts resembling some of the ways I expect the broader cleantech venture capital community to evolve over time.