Was Nest a cleantech startup? Was Waze?

To be blunt, who cares? From the standpoint of returns-maximizing VCs, it's a little bit irrelevant how you found the investment opportunity, if you were lucky enough to be a backer of Nest. The efficiency benefits? The superior design? The bigger home automation/security strategy beyond thermostats and smoke detectors? A strong-executing management team? Probably for most of the company's investors, it was some kind of a mix of all of the above, with varying degrees of emphasis.

Cleantech/greentech is not truly a category, although it is often treated as such out of necessity when tracking dollar amounts, describing investment strategies, getting written up by journalists, being used as the title of a blog, etc., etc. But I've yet to see any mutually exclusive, collectively exhaustive taxonomy of the cleantech category that isn't a big mess and which settles more questions than it raises.

Cleantech investing and entrepreneurship is about finding great business opportunities by viewing the world through a natural-resource-scarcity lens. It's a lens that is educated by clear long-term macro-trends, but one that shouldn't be myopically applied to only a narrow set of industries. The opportunities one finds when viewing the investment universe through such a lens may fit strongly or weakly into existing cleantech categories. But from the returns potential standpoint, I don't think it matters much. 

Many of the stronger-performing startups in this next wave of cleantech investing do in fact transcend the category. That's because they're built on technology platforms or utilize business models that are attractive to tech investors who might not care about cleantech, but who do like big markets. Or because the core technology, perhaps even invented by entrepreneurs who didn't really think about resource efficiency when doing so, nevertheless presents some resource efficiency benefits in its application. Bilal Zuberi of Lux Capital recently wrote a blog post in which he claimed that 3-D printing, cheaper space satellites, and drones offer resource efficiency benefits and thus should be considered to be types of cleantech. Some cleantech purists may roll their eyes at this contention; I do not. Even if these technologies aren't inherently resource-efficient, they certainly could be applied via downstream business-model innovation to achieve some significant resource efficiency gains. (I can't wait until my Amazon Prime membership includes a 3-D printer with spec-download service.)

My point is this: Investors arrive at good ideas from very different directions -- and that's OK! Increasingly, tech investors and cleantech investors are arriving at the same place, it would seem. Many of these tech investors are among those who are busy declaring to all LPs, "We don't do cleantech!" -- and yet they keep investing in companies which proponents of the cleantech sector would like to claim as one of their own. I recently had dinner with a senior partner at a mainstream VC firm that had just declared it was no longer going to be focusing on cleantech -- and yet he proceeded to excitedly tell me all about a recent energy efficiency deal the firm had done.

So, entrepreneurs, here are a few points to keep in mind.

1. If you're building a cleantech business, make sure to broaden your offering so customers get a lot more benefits than just resource-efficiency. I've spoken with several such smart entrepreneurs recently who are building smart energy-saving technologies, and yet who already know that they're going to need to offer additional customer benefits in order for people to want to give them a healthy chunk of what's in their wallet. Too many cleantech startups offer one thing, hang their hats on ROI, and fail to realize that ROI derived from a relatively small base may work out on paper, but rarely grabs customers' attention by itself. The line between cleantech markets and other tech markets are already blurred -- take advantage of that by actively transcending and combining into a truly winning solution.

2. If you're a cleantech entrepreneur, don't be afraid to pitch mainstream VCs who've signaled that they're not interested in cleantech. As long as your offering transcends the category per point No. 1 above. (Also, you might consider not calling yourself a "cleantech startup" in your initial pitch -- at least right now, when it's out of favor.)

3. If you don't consider yourself a cleantech entrepreneur, but your innovation offers significant resource-efficiency benefits, don't be afraid to hit up cleantech investors. To use an example from our own portfolio: Austin, Texas-based Noesis was founded by entrepreneur Scott Harmon, who was looking for smart ways to apply big data and web-based business models in fragmented markets in need of more efficiency (in the business sense). He hit upon the intersection of buildings and energy, after looking at several other non-cleantech markets. Noesis was then backed by Austin Ventures, which doesn't have a particular cleantech focus, but which recognized the business value of applying modern market-making solutions to a behind-the-times but huge market. Scott and the team at AV didn't get into this business because it was cleantech; to them, it's just a web-based startup aimed at a particularly attractive market opportunity. But we were glad when then they approached us as a potential investor, because we saw the fit and recognized that we could bring some additional market expertise to the table. And beyond pitching VCs, you will also find additional advantages from thinking about your resource-efficiency benefits when recruiting employees and when selling to customers. 

As the line between "cleantech" and "tech" blurs, embrace that. These aren't separate categories. Describe what you do through the appropriate lens for the particular audience you're talking to. Use the different lenses to identify new sources of value and growth. Now is a particularly valuable time to transcend the category, instead of sticking yourself into one artificial silo or the other.