Potential Partnerships between Greenstart and Key Academic/Research Institutions in the Cleantech Innovation Space
Greenstart, the San Francisco-based incubator set on helping 500+ commercially viable cleantech start-ups over the next decade, just concluded its inaugural incubation period. As the accelerator works to grow its class size and track towards that ambitious goal, now seems a good time to explore how regional partnerships might affect greater cleantech innovation by connecting the most promising advancements with crucial seed and series A funding.
Mark Muro and Jonathan Rothwell of the Brookings Institute offer a starting point by noting some similarities between modern cleantech and IT's initial boom in the 1990s. They note the correlation between IT-based productivity gains and the country's net increase of 23M jobs between 1992 and 2001, even as the IT sector itself accounted for only modest job creation over that same period. Comparing the size of today's cleantech sector with its computer manufacturing and semiconductor analogues, they say "it's therefore not unimaginable that, with a few strong years of growth and innovation, cleantech could be large enough to fuel considerable increases in aggregate economic growth." Greenstart's overriding goal is to encourage that growth in cleantech innovation.
Muro and Rothwell also note the pivotal role venture capital played in that IT boom. For comparison, the National Venture Capital Association notes that venture capital has funded over 17,000 IT companies but only 900 cleantech start-ups.Â
Considering that disparity, it stands to figure that Greenstart's ability to match cleantech innovation with greater cleantech investment could significantly achieve that objective while having an exponentially beneficial impact on the country's overall economic growth.
So there's the altruistic pitch, but what do entrepreneurs have to gain personally from a greater focus on cleantech?
Earth2Tech's expansive series on the state of cleantech venture capital has some answers. Let's begin with author Matthew Nordan's depiction of cleantech investment between 1995 and 2010:
and his projection for cleantech start-up investment through 2015:
The latter might trigger alarm at first blush as it predicts investors eschewing early-round investment for late-stage "retrenchment." But Nordan argues that this trend represents an opportunity for forward-thinking VCs:
More and more cleantech venture capital is earmarked for late-stage growth equity deals. As a result, these investment rounds are likely to engender price competition that depresses returns. In contrast, Seed/Series A cleantech financing looks to be cyclically underserved, and the enhanced return profile that accompanies scarcer capital could help offset early-stage technology risk. If I were at an LP institution right now, I’d be looking for the sharpest early-stage cleantech investment team that can zig while most investors zag.
Companies working with Greenstart are well positioned to seize on this opportunity. Their value is corroborated by the program's high profile, strong brand, and rigorous selection process. At the same time, Greenstart already has relationships with many leading venture capital firms, further enhancing a company's chances of receiving early-round funds. As such, Greenstart is well positioned to benefit each of the companies in its program.
But achieving the broader goal of driving greater cleantech innovation also means conveying these arguments to a larger pool of high-potential applicants. Partnering with programs like Cleantech to Market (C2M), which pairs advanced research with multidisciplinary scrutiny to reveal cleantech solutions that are ripe for commercialization, would go a long way in making that possible. There are a number of similarities, for example, between this electrochromic window project from C2M's 2011 program and SmarterShade, one of the first four Greenstart companies. These projects have essentially been pre-vetted and represent a source of leading candidates for future Greenstart classes.Â
Greenstart already has strong ties to the Berkeley community, so establishing a partnership with C2M is a logical first step, but this rationale applies to collaborations with the broader UC system (through CITRIS, CIEE, and i4energy), Stanford, NREL, and others as well.
These partnerships would expose new and larger pools of qualified candidates to Greenstart's application process, increasing the volume and viability of subsequent classes. More success stories would in turn strengthen cleantech's appeal to entrepreneurs and investors, creating a positive feedback loop. All the while, they would signify important sustained momentum as the world at large continues plodding towards a more sustainable energy future.
