Green on green
Question: How do you turn $1 into $8? Answer: Plant that seed money in Colorado's fertile cleantech industry, then sit back and watch it grow.
The Colorado Science and Technology Innovation Reinvestment Act, championed by the Colorado Cleantech Industry Association (CCIA) and passed by the Legislature this year, is designed to do exactly that.
"In the past and even more importantly recently, venture capital has dried up in the very early stages for technology commercialization for new companies and growing companies," CCIA Executive Director Christine Shapard says. "This provides more money in that early stage when there's really no money coming from elsewhere."
The act provides $2 million annually for the Clean Technology Discovery Evaluation Grant program, which "provides matching grants to Colorado's universities for market assessments of their clean technologies, to companies commercializing university clean technologies and to initiatives that serve to build the infrastructure that moves university technologies into the marketplace," says state Sen. Rollie Heath, who co-sponsored the bill with state Reps. Jim Riesberg and Cheri Gerou.
While there has been emphasis in the past on deploying energy technology, "This program is the first money focused on cleantech innovation," Shapard says.
It's modeled after a grant program that has successfully created jobs, new companies and leveraged millions in outside funding for the bioscience sector in Colorado, Shapard says. In three years, the state's $8.2 million investment in the Bioscience Discovery Evaluation Grant Program generated 18 new companies, created 149 direct jobs, 524 indirect jobs - and $68 million in outside capital, an eightfold increase.
"Colorado has shown great promise in developing as an overall leader in the cleantech industry and the biggest challenge we've seen for our clients and future clients is the lack of funding that was a result of the economic recession. This legislation promises to help fill that gap," says Greg Pfahl, a partner at the accounting firm of Hein and Associates who counts early stage cleantech companies among his clients and believes that this program "will help to accelerate company growth where it is needed the most."
"It's very, very important money," says Alfred "Buz" Brown, chairman and CEO of Boulder-based ION Engineering, which licensed its clean technology from the University of Colorado. "One critical use is doing that definitive piece of applied research that will make the university technology finance-able. Let's say that piece of research yielded a result that causes someone to want to form a company and attract investment capital. Maybe they got a federal grant of some kind. At that point, those companies desperately need additional funding."
The state cleantech grants will help alleviate the most difficult part of the enterprise side of research - getting past the so-called "valley of death," says William Farland, vice president for research at Colorado State University, which has nearly 200 faculty members working in its Clean Energy Supercluster. "The basic research is done, the proof of concept might be partly done, but you need to find leveraged funding to get to the point where this has some commercial value."
Very few investors are willing to support early development of "over the horizon" technologies that won't be commercially viable for years, says David Allen, CU's associate vice president for technology transfer.
"Technology generally is not created with commercial purpose in mind, but because the faculty is pushing the envelope of science," Allen says. "Mostly federal funding supported that work. A program like the Innovation Reinvestment Act is a critical component of addressing that gap between the research creation of technology and the commercial adoption of technology."
The CU system receives about 250 invention reports a year, Allen says, about 70 percent of which are related to cleantech and bioscience.
"Where this money will really make a difference is enabling them to work on projects that are different from their basic research funded by the federal government, projects with specific deliverables evaluated by experts in the business community," Allen says.
The researchers who have been pushing the envelope, he says, can now take that envelope and "put into it aspects of their work that are commercially relevant, which helps us find the right private-sector home.
"These small amounts of money in the overall development of a product demonstrate that the technology has features that are relevant to the marketplace. We're actually talking about definitive results, rather than intentions or promises," Allen says.
The depth of talent and expertise in Colorado's cleantech sector has helped make it one of the nation's top five states per capita in terms of jobs, companies and venture capital, Shapard says. The grant money, expected to start flowing in 2014, will only enhance the state's excellent cleantech reputation, which could lure outside companies here.
That snowball effect - money to create more cleantech companies and products, which in turn brings in more money, cleantech companies and products - is exactly what the CCIA anticipates, she says. Once it starts rolling, it's expected to grow larger and move faster every year.
"We have that deep expertise that not many other states have," Shapard says. "Our energy needs are going to increase drastically worldwide, and we have a lot of the answers right here in Colorado." ∴