I agree with many of your points. What I would like to see in many of these new VC firms is actually helping these people with great ideas instead of just throwing money at them as many times it just becomes a black hole. I think that many people who have a good idea could really do a lot better if the VC that invested in them especially at a seed level could provide some consulting, management help, and insight on their project because as we all know some people are good at investing something but actually getting that project to be able to go mainstream and be sold might take some restructuring and repackaging.

Bill—

A good point, and true, but the basic fact remains that solar isn’t yet cost-effective (as much as I’m a fan of solar’s long-term role, it’s true it’s not grid-parity yet), and energy efficiency is in many cases already cost-effective (one of our companies, for example, Powerit Solutions, offers customers an 18-24 month payback), but VCs are piling into the former and not the latter sectors. 

So while the McKinsey graph has its own challenges, I think the basic point still stands.

Good comment, thanks!

Just a word of warning on slide #17 - the McKinsey study.  That chart of “order of merit” for various investments in cleantech presumes 6% money (according to the McKinsey partner that I spoke to). 

It is a reasonable number for government/non-profits trying to plan their actions.  For everyone else, it is ridiculous.  The rank order is HUGELY affected by the cost of money and as such, this chart is worse than useless for the private sector, it’s downright misleading.

Rob, nice pitch!  Good information that flowed well.

I think VC firms need to look at the model & take their more speculative investments and direct them toward early-stage opportunities.  Use funds to drive licensing agreements & strategic partnerships, to grow the companies to higher valuations.  I think most cases will continue to be M&A exits (as you state in your presentation).

The Industry in general - and solar in particular - is very much like the Internet in ‘92 / ‘93.  Lots of folks still hacking away in their proverbial garages, and a handful of larger,  established non-US players entering our Market.

Lastly, it would behoove Investors (Institutions & Individuals) to collaborate and influence the government channels at the State & Federal levels, for policy incentives & changes, that would support early stage investments and drive larger mid-stage investments (for scaling Production, Distribution, etc.).  Many of the operations I see are easily 10+ years behind our German / Spanish / UK competitors…I think we have an edge, however, wrt “clean tech” technologies…

Deal flow still continues to be good for us out here in the Rocky Mountain region, & I see lots of potential over the next few years.  The near-term challenge will be the usual entrepreneurial issues coupled with the economy we’re going through…

Thanks for sharing this presentation - nicely done!

It is difficult to understand the concentration of capital into solar, wind and most biofuels technologies.I didn’t think VC’s followed the herd. M&A is unlikely, as there are so many competing technologies and no synergies to be acheived when combined. Don’t underestimte all the “invented here” problems with the founders. Also, most VC’s have never dealt with utility management teams and most solar, wind “users” or “customers” are utilities. Try moving a a pace just slightly faster than the Federal government.
Solar and wind will not have a disruptive technology that will eliminate the competition. I first financed these technologies in the early 80’s during the first energy crisis—I was instrumental in the IPO’s of Astropower, Evergreen Solr and others. This sector is no different than others, so I totally agree with your last slide. And it does take loger to commercialize that biotech—most biotech products have a highly focused market application, with focused scientists, whereas cleantech has broad markets and many “inventors”.

Frank, you sell short the solar folks.  Most, if not all, know their customers and the steps needed to acquire the Power Purchase Agreements needed to sell their electricity.  Our company is one of the “many” inventors and we are proceeding forward with our financing, not quite there yet, but closer.  I have experienced many “potential” investors (VC) who are so focused on IT that it takes a large sell and education to get them to the point of consideration.  I agree with you that the speed of the Federal Government can be slow, very slow.  Hopefully that will change, the eternal optimist, that’s me.

A very informative presentation. Its very interesting to see that currently lot of companies are also focusing on energy efficiency related solutions for example, demand response management, smart grid applications, etc. PVs may have to wait for some more time before being adopted on a large scale. In Germany, with a few favorable government policies allowing consumers to be able to sell their generated solar energy has helped induce a wide-scale adoption of photovoltaics.
It would be nice to see more VC investment in new start-ups providing integrated solutions that include micro-level renewable power generation, demand response management system, and energy storage system.

In metaphorical terms: White men can’t jump.