Joyce Ferris is a managing director of Blue Hill Partners (her bio can be found here). She will be a part of the panel for “Early Stage Financing for Clean Tech” on Friday during the Net Impact North America Conference.
When reading through the Blue Hill website, one thing in particular caught my eye. I’ve looked through more than 50 cleantech private equity firms’ websites but haven’t seen anyone else with this type of strategy:
We concentrate in areas within the GreenTech sector and build investment ‘clusters’. To date, Blue Hill has built a cluster around energy efficiency technologies for application in commercial and industrial buildings and facilities. (link)
I asked Joyce to elaborate on her cluster strategy:
JF: “So far it’s worked out well. I didn’t start out with that strategy, it just came through living and breathing in a particular sector I tended to start to see that type of dealflow more often. Also, when we look at a company we look at how well it fits within an area that we know; an area where we can add value. It ends up being that this particular cluster is well-suited to it.”
She added that focusing on firms within a tight cluster allows her to make strategic investments; investments that complement each other. The whole strategy is very interesting. Obviously it makes sense to develop a domain expertise and try to focus on companies where your expertise can help them succeed. Investing in complementary companies also increases the chance that each of them will succeed. However, Blue Hill’s portfolio is extremely un-diversified, even for a firm with a narrow focus. It’s unclear to me which effect dominates; is the risk/return tradeoff better with or without this strategy? Perhaps this would be a good question for the panel on Friday…
I moved on to ask Joyce about suggestions for students with cleantech venture capital aspirations:
JF: “My belief is that the best investors are going to be those who have experience actually building and running companies. There are very good investors that started out as investors, but I think that having experience building and operating companies will make you a stronger investor.”
TH: “So, join a startup or join a General Electric?”
JF: “I think that there are multiple paths that will work. I think it depends more on the nature of the opportunity within an organization than the organization itself. I guess I would just say that if someone’s ultimate goal is to be an investor, having strategic experience within the sector is really valuable.”
We finished up by talking about the differences between investing in high-profile, media-friendly technologies vs. those that fly beneath the radar:
TH: “It’s very interesting for me to see the difference between companies that try to attack what everybody else is attacking, which is of course the solar and the wind industries, vs. the companies that really like to play in the underappreciated spaces, which very probably have as much if not more potential.”
JF: “Certainly our strategy is the underappreciated spaces, and energy efficiency has been that for a while although that’s starting to change.”
Ahh…the tipping point. What a nice place to be. Watch out for Aircuity, Joyce’s “cool”est company right now.
Tristan Handy is a first year MBA student at the Kenan-Flagler Business School and part of a team of students that is covering the Net Impact North America Conference for Triple Pundit. He is the founder of SustainableCapitalism.org.