Clean-Tech Entrepreneurs: It takes green to make green
The NREL Industry Growth Forum is about connecting the billions of dollars available in the capital markets with business talent worthy of investment. It is about connecting that business talent with the legal expertise needed to tap into federal and state incentive funds. And it is about leveraging intellectual property, human capital, financing and public policy to drive the nascent clean technology economy.
The November forum, presented by the National Renewable Energy Laboratory, selected a winner and two additional companies to receive up to $10,000 plus comprehensive business development services to bring their product to commercialization. It wasn’t winner-take-all, though. Entrepreneurs who attended the forum were able to meet privately with dozens of business resources including bankers, venture capitalists, lawyers with expertise in clean tech, and public policymakers.
One theme underlying the panel discussions was the money available for clean technology companies. The federal government has been pouring billions of dollars into clean tech since 2005. John A. Herrick, a partner at the Denver law firm Brownstein Hyatt Farber Schreck, pointed out a Department of Energy Loan Guarantee program that made $4 billion available for lending in 2006, $10 billion for energy efficiency and renewable energy (EE&RE) projects in 2008, and an additional $8.5 billion for EE&RE projects in 2009. The same program also provided an additional $28.5 billion in 2009 for nuclear, carbon sequestration and coal gasification projects.
A new round of federal loan guarantees under the Recovery Act provides an additional $100 billion for conventional renewable energy systems, electric power transmission systems and pilot-scale biofuel projects. On top of these programs, many states each have tens of millions in stimulus dollars specifically tagged for assisting clean technology companies. Investing in a new industry requires massive investment at different stages along the path to commercialization.
“Most of the federal EE&RE grant funds under the Recovery Act are closed,” Herrick said. “However, there are still multiple venues for obtaining funds such as state grants available from federal stimulus monies and the Federal Loan Guarantee programs that stimulate the debt markets.
“These different programs are not easily understood, though. I’d recommend that entrepreneurs use an established clean-tech attorney to help them figure out which program best meets their needs, complete the application paperwork and assist with all of the ongoing paperwork. These opportunities are highly competitive. Completing and filing all the paperwork required is not for the meek and timid.”
Ron Bernal, partner at Sequel Venture Partners in Boulder and one of the forum judges, said he evaluated green-tech companies in the forum the same way he would any company his firm was considering investing in.
“The judges looked closely at each company’s overall business, the management team and its experience, and its path to market,” Bernal said.
“Clean technology is a new market,” he said. “Private equity funds are going to follow government investments. There isn’t a lot of domain experience to tap at this time. For us in the private equity market, the management team is going to have to be seasoned. A proven management team is one metric that is weighted more heavily to balance the risk/reward of investing in an emerging market.”
The CleanTech Group, an international organization headquartered in San Francisco, has had its finger on the pulse of the clean-tech industry since 2002 and offered a bullish forecast for 2010 in its “10 Clean Technology Predictions for 2010.”
Among the predictions offered up by Nicholas Parker, the group’s executive chairman: “Private capital growth recovers, record fund year; Buffet leads the super rich into clean tech; and acquisitions and consolidations accelerate.”
Businesses across all markets have been challenged in their efforts to obtain funding over the last 18 months. Green shoots are only now emerging as a result of government investment in clean tech years earlier. Three of the CleanTech Group’s 10 predictions relate specifically to financing clean technologies in 2010, and expectations point to a year of ample investment fund availability across most clean technology sectors.