I've had a lot of good conversations recently with managers from large companies that are now eagerly looking into cleantech as a potentially strategic area. Many Fortune 100 companies, of course, have been all over cleantech for a few years now.  But it's still significant to note that a new wave of additional corporate strategy managers are looking anew into the sector and trying to determine if there are opportunities within it for growth for their company.  It's a really encouraging signal. And of course, I happen to agree with them that there are opportunities here.

Way way way back in the last century, I actually started my "cleantech" (of course, it wasn't called that back then) career advising large companies on how to think about capturing opportunities in the sector. So for what its worth, here are a few pieces of advice for any corporate managers out there who are tasked with figuring out their company's cleantech startup engagement strategy.

1. Collect your company's own energy- and resource-related pain points first, and address them as a priority.

Building a brand new revenue pathway is hard and takes time. Many great corporate ideas have withered on the vine because the internal champions ran out of rope before the benefits were felt.

But I guarantee that in any large company, there are plenty of opportunities where energy and other input costs are a problem. And quite often there are lots of opportunities to improve operational performance via some of the tools available from cleantech startups today. The best way to help build internal support for a cleantech startup engagement strategy is to first use such engagements to benefit the bottom line, before addressing the top line.

One large utility I've been speaking with recently does a phenomenal job of this. They have delivered to our firm and to several other groups a full list of several dozen identified "needs and wants" in terms of technology innovations that could help their operations. It's a very specific list, which really helps focus their conversations. It helps them qualify the conversations they're having -- are they talking to investors and advisors that can actually help them, as opposed to those with nothing more to offer than lots of opinions? It also gave this utility's tech team an excuse to go talk with the company's operating business units and get buy-in for their strategy for engaging cleantech startups and investors.

Very often I see corporate strategy managers launching into something of a fishing expedition when tasked with developing a cleantech startup engagement plan. They start at a very, very high level and eventually work their way down to sector-level recommendations. But my suggestion would be instead to start with a bottom-up approach, working from real challenges their company already faces. The brand new top-line growth opportunities will become more obvious along the way anyway.

2. Bring some money to the table.

Startups are busy. Investors are busy. Both operate on a vastly different timescale than most corporations. Trying to mesh those different perspectives and make a productive relationship is difficult unless there are incentives involved.

Many corporate managers understand this. But I do see examples of corporate managers looking to engage with cleantech startups and investors in hopes of getting insights and relationships, yet not bringing any financial resources. But with little real value being brought to the table from the large corporation, the conversations don't really go anywhere. And to be blunt, if the corporation isn't willing to put a budget toward this kind of exercise, there isn't really a strong internal mandate for it anyway.

It's important to note that this doesn't mean I'm advocating that all large corporations get into venture capital investments. That's a fit for some companies, but not for others. Yet in most cases, what would be a relatively small amount of capital from the perspective of the large corporation could be a meaningful amount of NRE-type revenue for a startup, and having that kind of potential relationship as a possibility will help sharpen conversations on both sides of the table. That's not to say that the corporation should lead with their checkbook. But it makes the conversations more tangible and meaningful for both parties if there's a potential small (and eventually large) partnership that can be developed, and that means there needs to be a budget allocated for such things right from the beginning.  

This also fits with the first point I made above. Clearly, to justify a budget, there needs to be an IRR, which means addressing real needs.

3. Don't just follow the venture capitalists.

Many of these corporate managers make venture capital firms their first stop. Makes sense -- VCs should have already filtered a lot of information and should be able to help identify trends in the market. They should know about a lot of startups already, and they often have a pre-existing portfolio and can be a good access point into that portfolio.  

But don't stop there.  As we've discussed ad nauseum in this space, the venture capital model is a fit for only a very small share of good business ideas in cleantech.  And given the differences between corporate and venture investment expectations (in terms of openness to different timeframes, different rates of return, different levels of capital intensity, etc.), there's a good chance that the more attractive areas for large corporate growth in cleantech won't overlap with what turns on cleantech VCs.  So if you're only viewing the cleantech market through a VC-colored lens, you're going to miss most of the picture.

For this same reason, don't use venture dollars as a proxy for assessing entrepreneurial activity levels in a sector. For example, just because VCs haven't (yet) gotten heavily into the water tech sector doesn't mean there aren't tons of water tech and water services entrepreneurs that might be interesting to you. Likewise, I talk to too many corporate managers who start off their conversations by discussing solar. Just because VCs have over-invested into the solar subsector doesn't mean it's the right place to start your own investigations.

So do start with VCs, and start a conversation for potential mutual benefit, but don't stop there.  Figure out how to reach beyond and see beyond the cleantech VC community.

4. Find and join cleantech networks.

So if you can't use VCs as the ultimate sherpa, where can you turn?  Fortunately, there are a number of great networking organizations that can be used to both build visibility, and to build a broad array of relationships, to find out more about what's going on across the entirety of the market. Corporations need to be joining these groups, even if they don't yet consider themselves a "cleantech company" -- not only because of the networking potential such memberships would bring, but also because, per the first point above, resource and input cost issues affect all companies big and small, regardless of sector. Joining these groups can be well worth any nominal corporate membership fee, if the relationships are initiated with a strong intent to maximize their value to the corporation, across strategic, sales, communications, recruitment, and potential policy dimensions. Companies like Google and National Grid have been using this type of relationship to great effect, but many other corporations are still figuring it out.  It can be critical, however, to successfully getting a complete picture of this highly fragmented market and industry, where no one knows all the relevant players (not even the VCs).  

Several such national-level organizations I've been involved in and would recommend include the Clean Economy Network, the Cleantech Open, and the Cleantech Group.  Here in New England, there are also regional organizations like the New England Clean Energy Council that play an important role at that local level. There are other groups as well, too numerous for me to list here, that you can find without having to look really hard. Join them. Use them. And deploy those relationships to get real smart and real connected, real quick.