The Innovation Cycle and the Commercialization Cycle
Rob Day: April 21, 2008, 5:53 PM
Looking forward to seeing everyone at our REBN-East networking event at Boston University on Tuesday night. As a topic for discussion, I'll throw this thought out there:
Had the pleasure of visiting NREL last week as part of a productive trip organized by the New England Clean Energy Council. There, I and around a dozen other VCs from the Boston area were presented to by several of the Lab's researchers in areas like solar PV, biofuels, energy storage, etc. It was a good opportunity to once again peak "under the hood" at a DOE energy lab, to get a quick overview of some of the world-class research being done there.
It was necessarily a brief overview, but one thing that came through for me loud and clear (yet again) was how short the Innovation Cycle is in many of these sectors. Yes, each innovation in an area like solar is often the result of years of difficult research. But with so many efforts underway in parallel (at NREL and elsewhere), the results mean that every year there's a new bright idea for how to eke out more electricity from available solar resources (for example). New materials, improved manufacturing techniques, more effective components...
In many cleantech sectors there's a backlog of these kinds of innovations, as the ideas languish uncommercialized in the labs and the literature, awaiting visionary entrepreneurs and investors. But in some of the more investigated sectors, investors are quick to jump on the latest innovation out of the various centers of research. Breakthrough innovations funded last year are trumped (on paper, at least) by this year's funded innovations, and they'll all be trumped by next year's funded innovations.
Meanwhile, we're all still waiting on many of the innovations from several years back to be fully commercialized. Continuing to pick on the solar sector as illustrative example, we're all still waiting for many of the promised thin-film manufacturers to fully hit the market. That's not to cast doubt on those players, it's just a lesson in how long the Commercialization Cycle is for these technologies.
So the questions for Tuesday's REBN-East event are these:
1. Put on your "green cluster-builder" hat -- what could this disparity between the Innovation Cycle and the Commercialization Cycle mean in terms of key roles for public policy?
2. Put on your VC hat -- what could the disparity mean for investors?
Speaking of cleantech clusters: The NECEC has launched a new Fellowship Program to help experienced entrepreneurs from outside the industry to gain familiarity with clean technologies and launch the Next Big Things. Check it out!
Deals from the past week (-ish):
Grid-scale solar energy developer eSolar has raised $130mm from Idealab, Oak Investment Partners, and Google.org. They plan on building a demonstration plant later this year. Back in January we passed along word of Google's $10mm investment -- no word on whether this new investment figure includes that or not.
Rob Day is a Partner with Black Coral Capital, based in Boston. He has been a cleantech private equity investor since 2004, and acts or has served as a Director, Observer and advisory board member to multiple companies in the energy tech and related sectors. Rob was a co-founder of the Renewable Energy Business Network (www.rebn.org), a non-profit organization which was acquired in 2009 by the Clean Economy Network. The views expressed on this blog are those of Rob, not necessarily the views of any of his colleagues and affiliated organizations. Contact Rob at .(JavaScript must be enabled to view this email address).
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