Friday’s second session at the Net Impact North America conference was Cleantech Venture Capital Investing. After having interviewed two of the three panelists prior to the conference (posts are here and here), the panel itself was an opportunity to think more deeply about the lessons offered by some of the most experienced players in the cleantech sector. The panelists were three managing directors at Philadelphia-based VC firms: from left to right, Joyce Ferris, David Lincoln, and Tucker Twitmyer. The moderator, Clint Wilder, is at the far right.
The panel started off with the standard “What is cleantech?” question, which the audience and panelists all clearly dreaded. Joyce stepped up to the plate, however, with a very succinct answer that seemed to surprise everyone present: “Cleantech is any technology that reduces natural resource consumption.” I’ll take that over Wikipedia’s definition any day.
With the definitional issues out of the way, the conversation quickly turned into a debate about clean coal and nuclear. The three panelists were of the opinion that any technology that improves upon existing technology is worth putting resources into and should not be left off the table. As Tucker said, “No one investing in the industry believes that clean coal is clean, it’s just cleaner.” That seemed fair to my ears, although not everyone in the audience agreed.
The moderator, Clint Wilder, took a very strong stance against clean coal and nuclear in his recent book but decided to stay out of the debate. On page 24 of the paperback edition there is an entire section entitled “What’s not clean tech: Nuclear and Coal”. The book points out that nuclear has massive capital and scale problems and carbon sequestration techniques needed to make coal truly clean are nonexistant. The concluding paragraph of the section reads as follows:
The best way to “clean up” coal is to replace as much coal-fired power as possible with electricity from wind, solar, biomass, geothermal, tidal, and other renewable clean-tech sources and to make both clean and non-clean power generation as efficient as possible.
Great sentiment, and especially interesting in the current context. Three heavy-hitting investors on one side of the issue and students and an author on the other. This dichotomy of outlook speaks to the significant opportunity for leadership, either political or otherwise, to establish a common vision in the industry.
The other very interesting conversation centered around the difference in perspective between east coast and west coast VCs. Joyce, Tucker, and David are all from firms that have a conservative outlook on cleantech: they are not looking for a silver bullet but rather significant, incremental change. Silicon Valley firms such as Kleiner Perkins often live much further out on the edge.
Tucker used the example of Catch the Wind, one of his portfolio companies. Catch the Wind makes a device that attaches to existing wind turbines and allows them to follow the wind more effectively, thereby improving generation efficiency. Tucker pointed out that companies like this are perfect targets for VC funding as they are small enough to be able to make meaningful use of $3-5M. Comparing this with $500M raised to-date on Nanosolar by Silicon Valley firms is very instructive in terms of the difference in outlook.
Overall this was the best panel I saw during the entire conference. Both the audience and panel built from a deep foundation of practicality towards a bigger cleantech vision.
Tristan Handy is a first year MBA student at the Kenan-Flagler Business School and part of a team of students that covered the Net Impact North America Conference for Triple Pundit. He is the founder of SustainableCapitalism.org.