The SDForum held its Green and Clean Evening Series quarterly event on October 28, 2010 at Orrick in Menlo Park. Mitch Zuklie, leader of Orrick’s energy industry group, led a panel discussion on the effectiveness of the clean technology funding provided for in the American Recovery and Reinvestment Act of 2009.
Panelists included Chris Dier, CFO, Solaria Corporation; Corwin Hardham, PhD, CEO and CTO, Makani Power; Mark Iwanowski, Venture Partner, Trident Capital; Dr. John T. Kelly, President Altex Technologies Corporation; and Seth Miller, Partner, DBL Investors.
Beginning as usual with audience involvement, Zuklie asked attendees for questions and filled a whiteboard with topics of interest. The audience of entrepreneurs and clean technology experts participated actively in the dialogue, which went beyond the stimulus package to explore a variety of issues facing clean technology.
Asked to define clean technology, Hardham stated that the key was carbon emission reductions through sustainable technologies capable of making a substantial difference. Miller added that clean technologies are also those that address the water problem and remove chemicals from the environment.
According to the panelists, clean technology firms face distinctive risks and management challenges. Miller noted that clean technology firms must make high capital expenditures and overcome large technical risks. Iwanowski pointed out that it is particularly difficult for clean technology firms to establish effective cost and pricing models. Miller and Iwanowski, both venture capitalists, said that they dig deeply into the cost models of businesses, making sure that the assumptions behind the numbers are credible.
Several panelists emphasized that one of the most complex decisions facing clean technology firms is when to scale up. Scaling up early promises advantages in costs and market share, but doing so before the technology is ready can lead to huge losses.
Responding to a question about government funding, Dier recounted how Solaria, a solar energy firm, obtained funding for research and development within three months of application through a straightforward process. Dier, together with a public affairs staff member, worked through the application process with Department of Energy staff. In a similar manner, Miller said that one of his portfolio firms, BrightSource, received government funding through the efforts of a public affairs staff member.
Hardham, whose firm Makani Power also received government funding, noted that government funding had proven valuable in overcoming risky technological hurdles. Iwanowski, however, warned that startups should not base their business models on such funding as it is neither quick nor reliable. Kelly pointed out that the speed of funding depends on the agency within the DOE responsible for disbursing funds for the specific program. He emphasized the importance of applying early.
While raising concerns that other countries, particularly China, Russia, Singapore, and Malaysia, are more aggressively promoting clean technology, offering greater funding and acting more quickly, the panelists and audience members spoke very favorably of the DOE, praising the hard work of the staff, improvements in its processes, and its commitment to clean technology.
For photos of the event, see http://www.djcline.com/2010/11/01/oct-28-2010-stimulus-report-card/.