Posted by Greenbang on March 31st, 2008
We ask the head of a venture capitalist firm how to pick a winner…
By Dan Ilett
It’s all about money this clean-tech business. And don’t ever be fooled into thinking that the big boys with the cash have any other agenda other than to make lots of it.
That’s how Bill Green, managing director of venture capitalist VantagePoint, puts it. And he doesn’t pull his punches.
“We are not triple bottom line investors [people, planet, profits],” he says. “That’s a fine theory and those who embrace it are great folks and they’re thought leaders in that area and welcome to do so.
“We have a different philosophy and this can be controversial certainly in the NGO community and in the tree-hugger community.
“We take a view that says ‘just focus on building the company’. And if the company is pointed at the right goal or aim and it gets large – which implies that it’s making money because things that don’t make money don’t get large – then we’re going to see the result that we want and hope for.”
Mr Green is part of a team that made its first clean-tech investment way back in 2003. Since then, it has backed some well-know firms in the space including Tesla Motors, BrightSource, Chemrec, solarcentury and Shai Agassi’s Project Better Place .
There are also some impressive names on the advisory board - William McDonough (architect and design genius); Bernie Bulkin (former chief scientist BP); James Woolsey, former director of CIA; John Leggate (CIO, BP); and Terry Tamminen (former Chief Advisor to California’s governor).
All these big names pack quite a lot of weight. But financial success says much more to investors than famous people. So how does a venture capitalist pick the winning horse in clean tech?
“The average in venture capital history - and this should be no different [in this industry] – is that two out of ten will be successful,” says Mr Green. “So it’s the 80/20 rule.
“Sorry for the cliché but 20 percent of your companies are going to make you a 100 percent of your money, or 80 percent of your money at least. So we think it will be the same here.
“My partner Stephan Dolezalek describes these mini-trends. Corn-ethanol was one such where we saw all this interesting corn-ethanol and is the next big thing, and so and then 12 months later nobody is selling corn-ethanol.
“So we think that it is possible to become distracted by these smaller market movements that we believe are taking place within in a larger frame that says [that] we’re going to see cyclicality but the general trend for this energy technology, water technology, seems to be a growth trend.”
But Mr Green highlights some big differences in clean-tech to previous markets – namely that the demand for clean water, air and energy is already there. It is the delivery mechanism that has to change for several reasons.
“When we built the internet and the related businesses, depending on your point-of-view, we were painting the car as we were driving it off the factory floor,” he says.
“I mean, nobody knew what services consumers wanted. Nobody knew if you would actually buy pet food on line. It sounded good. By books online, why not pet food? Right? I mean, we just didn’t know. Maybe some of this we could’ve known.
“This is quite different. We know we want clean water. We know what the market is for clean water. We know where that market is.
“So the point however is, this is different because this is a market problem towards which we are all reaching.
“The other reason I would offer - a personal view - says this feels different - is that when you think about the drivers from my first point, this is a multi-factorial problem. This is about – there’s a diner I go to and there’s a sign on the wall - it’s a cheap place – it says, ‘fast-food real good, served cheap, pick two’.
“And this is similar to that, in that there are those who believe that climate crisis is a real driver for changes in our behaviour, whether it’s relative to automobiles or fuels. There are some who believe that peak oil is really the driver that lurks behind all of this.
“You can believe in the ever-increasing demand from India and China; you can believe in energy security issues.
“It’s four drivers. Pick one, pick two. And for those people who say “climate change is a hoax” - fine, don’t believe in climate change. How do you like energy security? ‘Ah, that’s real’. “
Mr Green is refreshingly honest about his approach to the clean-tech sector. But he says companies could learn a thing or two from the purely financial approach to sustainability – especially in the way they structure.
“You really don’t want the chief sustainability officer, you want the chief financial officer,” he says. “We need to change this conversation around. The chief sustainability officer, man he’s your friend. He drinks the cool-aid, he wakes up in the morning, he reads your blog, he so gets this, he hates George Bush, it’s all good. That’s not going to get us to done.
“The chief financial officer wakes up and says ‘here, regardless of my personal view, my fiduciary responsibility is to earn money for company X. How does this work exactly?’
“A CFO’s job is to count the money and that takes so many different forms that he’s not, quite often, thinking about this form of revenue - negawatts is an expression here – the money you generate from not using electricity.
“What I’d love to see more talked about, where we move away from all of this as a charity project and a science fair. How do we save money on this? Make sense?
“We seem to have lost to some extent the thread that says the economics of doing this can be so clearly understood. Not in every case, not with every start-up but we need to get our heads unscrewed from the contentious political aspect of this and say “friends, this is all about good business. This is all about clear thinking”.
“And if we have these other lovely fringe benefits, and if the trees get hugged and it’s collateral damage, great, we’ll have an extra pint, that’ll feel good. But this is a business story, right, and that’s why I respond to your CSO target a little differently.”
VantagePoint is behind the electric sportscar, Tesla. It led the first round of investment in cobalt bio-fuels, which is bio-butanol. It identified large-scale power storage as a mega trend.
“So five out of five times we’ve been able to pickoff a trend line and say that is important.” he says. “We think that we still have a long way to go around innovation in carbon. We see real obstacles, and therefore real opportunity, in how the carbon capture and sequestration game plays out.”
Is that a hint then, I wonder? Is carbon capture the right horse to back? Today Mr Green is open and straight-talking with me - but on that question he’s not saying anything…
Posted by Greenbang on March 31st, 2008
We’ve heard a lot of people talk about green IT. We’re seeing a lot of surveys flying around, which suggest to us that no one really knows what they want to say, they just want to say something.
So we were delighted when CEO of BEA Systems (Europe) Rob Ontiveros responded to our questions on his survey, which asked 480 people in the financial services, public sector, and telecommunications sectors to tell all about sustainability.
Greenbang: What is sustainable IT? It seems like a very vague term.
Mr Ontiveros: The term ‘Sustainable’ has been very much in vogue within the last year - and this has been influenced by government adopting the term, for example, the UK Government’s Sustainable Procurement National Action Plan or the government watchdog the Sustainable Development Commission. Sustainable IT reflects the fact that this isn’t just about buying the latest technology to fix the ‘green’ problem - but it’s about the investing in a technology infrastructure that will address your organisation’s green needs now and in the future. This resonates well with BEA who’s whole ethos has been around building an enterprise architecture based on SOA to future-proof your IT.
Why is there so much emphasis on IT in the green business space? And why are so many companies (yours included) talking about this now?
IT has a significant role to play in helping an organisation to become green. By adopting technologies such as server virtualization, IT can have a direct impact on an organisations carbon footprint, it also has a knock on effect in other areas of an organisation. For example enabling employees to work from home or reducing travel requirements through video conferencing etc. Gartner quotes a 2% direct impact on C02 emissions through IT and a 98% indirect impact.
BEA are talking about this now as we’ve recently announced the delivery of BEA Virtualization 2.0 – the completion of BEA’s Java application virtualization offering.
If companies such as yours are such thought leaders, why is it only now you are talking about sustainable IT? Surely the crunch time was at least a decade ago…
You’re right - the IT industry as a whole should have been leading this drive a decade ago. Awareness and the political profile simply wasn’t there, it was the dot com boom and most organisations were driven by shareholder value. Indeed the hardware manufacturers have lead the Green drive and directives such as WEEE only come into force in 2003. The software industry has been following hot on the heels, investing in R&D around areas such as application/java virtualization. The IT industry like many other sectors (as identified in our survey) are being influenced by customers and employees to address the Green issues. As an organisation we will be increasingly asked by our customers how our solutions will reduce their carbon emissions. One of the tools we’re using at the moment is a total cost of ownership calculator that examines the implications of moving to a hypervisor-based virtualization platform (www.bea.com/virtualization)
Your research sounds much the same as many other reports. What is the most interesting thing for you? And why did you commission the research?
We commissioned the research - as the majority of the other reports focused mainly on hardware issues around datacentre consolidation etc. Our research wanted to identify awareness and uptake in the relatively new market of server virtualization and in particularly Java virtualization. What was interesting was that although almost two-thirds of organizations have or are developing plans to reduce energy and emissions caused by their use of technology, they are delaying investment, partly because of cost but also because of a lack of awareness concerning the appropriate energy saving solutions. The survey uncovered that 39% of European organisations were ‘not very aware’ of a virtualization—a key enabler of the ‘green data centre’.
Anything you’d like to add?
The most interesting finding for us from our survey was that employees have the greatest impact on an organisation becoming more ‘green’. Indeed - a survey done of BEA’s own employees showed 89% agree with this finding.
Posted by jumperhead on March 31st, 2008
Good news, all. It looks like the chicken licken ‘the sky is falling in’ type predictions that have dogged electric cars might not actually be about to come true: people can plug in and recharge their hybrid cars from a wall plug socket, without bringing down the electricity grid and thrusting us, worm-like, into a new darkness where we have no power to power our TVs and toasters. Imagine it: no entertainment and no way to cook a Pop Tart. Greenbang shuddered a little thinking about it.
Phew.
According to GridPoint, a company which makes products to manage and store electricity for power compaines, did a test with Duke Energy for the smart charging of hybrids, balancing out the time most people will plug in their cars (late afternoon) and when electricity is cheapest (late evening)
It went like this:
Duke Energy engineers tested GridPoint’s smart charging capability by plugging a PHEV into a garage wall outlet controlled by the GridPoint SmartGrid Platform in the late afternoon. Duke began charging the vehicle at 10 p.m. and completed charging prior to the morning peak, leaving the car fully charged for the driver’s morning commute. GridPoint’s platform successfully controlled, measured and verified the charging of an electric vehicle parked in a residential garage.
It’s a bit of a red letter day for GridPoint: it also got a $15 million funding injection Quercus Trust, which invests in alternative energy companies. GridPoint has so far raised $102 million in equity capital.
Posted by jumperhead on March 31st, 2008
The words ‘ethanol’ and ‘millions of dollars of investment’ are natural bedfellows these days, it seems. They’re going together like the proverbial horse and carriage, like good cheese and wine, like fish and chips, like Cannon and Ball. Yes, they’re that perfect together. Greenbang has amassed evidence to prove her theory:
Exhibit A: Biofuels maker Pacific Ethanol has got a $40 million funding injection from Lyles United after selling some of its stock to the company. Lyles recently gave Pacific Ethanol $30 million in debt financing.
In a filing last week with the SEC, Pacific Ethanol said this:
We believe that current and future capital resources, revenues generated from operations and other existing sources of liquidity, including available proceeds from our existing debt financing, will be adequate to fund our operations through 2008 and meet our capital expenditure requirements to reach our goal of 220 million gallons of annual production capacity in 2008 upon completion of our Burley and Stockton facilities. We will require substantial additional financing to reach our goal of 420 million gallons of annual production capacity in 2010 and we plan to reach this goal through new construction or acquisition of additional ethanol production facilities. If ethanol production margins deteriorate from current levels, if we experience additional cost overruns at our ethanol production facilities under construction, if our capital requirements or cash flows otherwise vary materially and adversely from our current projections, or if other adverse unforeseen circumstances occur, our working capital may be inadequate to fully fund our operations or meet our capital expenditure requirements, or both. We are presently exploring potential sources of new financing to provide additional working capital. Our failure to raise capital if or when needed may have a material adverse effect on our results of operations, liquidity and cash flows and may restrict our growth and hinder our ability to compete.
In other biofuels news, the government of Canada has dished out the folding matter to Ontario biofuels mob IGPC Ethanol for a new plant.
Here’s the skinny:
The 150 million litre ethanol plant, expected to be completed this November, has also received equity investment from farmers totalling close to $15.5 million. In addition to ethanol, the plant will produce distillers dried grains with solubles and distillers wet grains, sources of protein for dairy and beef cows, hogs and poultry, and carbon dioxide for use in carbonated beverages, freezing foods and making chemicals. This is the third ethanol plant funded under the ecoABC initiative and its opening is expected to create 35 new jobs in the region.
Posted by jumperhead on March 31st, 2008
Just a quickie for you here: Defra has put out the latest results of its studies on the UK’s greenhouse gas emissions by person, gas, industry and so on. Wondering how we’re doing? Read on, for Greenbang has picked the tastiest stats for your emission degustation…
In 2007, UK emissions of the basket of six greenhouse gases(1) covered by the Kyoto Protocol were provisionally estimated to be 639.4 million tonnes carbon dioxide equivalent(2). This was 2 per cent lower than the 2006 figure of 652.3 million tonnes.
Carbon dioxide (CO2) is the main greenhouse gas, accounting for about 85 per cent of total UK greenhouse gas emissions in 2006, the latest year for which final results are available. In 2007, UK net emissions of carbon dioxide(3) were provisionally estimated to be 543.7 million tonnes. This was 2 per cent lower than the 2006 figure of 554.5 million tonnes. The decrease resulted from fuel switching from coal to natural gas for electricity generation, combined with lower fossil fuel consumption by households and industry.
There was little change in carbon dioxide (CO2) emissions on an end-user basis between 2005 and 2006. In 2006, total CO2 emissions were 554.5 million tonnes. Ninety per cent of this total was accounted for by three sectors; business, transport and residential, which represented 35 per cent, 28 per cent and 27 per cent of the total respectively. Of these sectors there was an increase of 1.4 per cent in business emissions, from 193.4 million tonnes in 2005 to 196.1 million tonnes in 2006, but little change in residential or transport emissions.
Posted by jumperhead on March 31st, 2008
Greenbang has always fancied becoming an inventor, dreaming up some must have gadget and retiring to the South Seas to live as a very rich old eccentric, storing all that cash in her mattress. A lot of people are hoping to milk the ocean for green business. Why not Greenbang? There must be some untapped potential there. Take walruses, for example. They have enormous fat reserves. Surely that could be turned into some source of renewable energy (although Greenbang doesn’t really want to know how you’d get the fat out). Or migrating salmon. They’re very energetic with all that fighting to get upstream malarky. Perhaps we could strap them with tiny turbines? And all the wee that little kids put into the ocean on seaside daytrips - a rich waste-to-energy resource maybe?
Ocean fertilisation company Climos reckons it has a better plan - it hopes to offset carbon by a process called ocean iron fertilisation, which encourages natural phytoplankton, acting as a carbon sink.
Now Climos has enlisted the help of engineering company Tetra Tech to see how far the idea has legs.
Tetra Tech, together with Climos, will develop a Conceptual Model and a Master Environmental Report as part of this process. The Conceptual Model will review the scientific background, experimental history, and recent research results for this technique, in addition to providing a detailed review and exploration of environmental questions and concerns. The Master Environmental Report will provide an environmental management framework to evaluate the characteristics and sensitivities of the affected marine environment. Tetra Tech has previously produced such environmental management tools for numerous governmental and private clients, including the U.S Environmental Protection Agency, the Electric Power Research Institute and Chevron Thailand. These efforts have helped to foster stakeholder consensus on complex environmental issues. Climos will use these studies to engage governments, NGOs, the scientific community and the carbon market in thoughtful and productive discussion on ways to move forward responsibly with further development of OIF.
Tetra Tech’s efforts will be conducted by the Research & Development Group in Lafayette, CA. Tetra Tech’s R&D Group has extensive expertise in biogeochemistry, carbon cycling and coupled global climate modeling as well as expertise in developing thorough environmental impact reports for a wide range of projects. The team has previously been recognized for its significant scientific contributions and the ability to effectively communicate study results to a wide audience of interested parties and decision makers.
Posted by jumperhead on March 31st, 2008
Ireland has always come across as a place with its finger on the pulse. How else could you explain it being the most successful country in the Eurovision song contest, ever? Seven times no less. Scratch James Joyce and Seamus Heaney, Greenbang bets many an itinerant Irish man gets teary eyed over a pint of Guinness, remembering the lilting sounds of the Jonny Logan Eurovision classic ‘What’s another year?’
But no country can live by Eurovision alone. Sometimes you have to have to drag yourself away, and make a name for yourself and start investing in renewables. Which is just what Ireland has done.
Ireland’s Electricity Supply Board is investing €22 billion in renewable energy which it says will halve its carbon emissions within 12 years, and make it carbon net-zero by 2035.
Here’s the raw data:
Fifty percent of the overall investment package is geared towards investments in our renewable future. €4bn of this will be directly invested in renewable energy projects and €6.5bn will be spent facilitating renewables including smart metering and smart networks. […]
By 2020, ESB will be delivering one-third of its electricity from renewable generation. This will include over 1,400 megawatts of wind generation, in addition to wave, tidal and biomass. To promote this, the company will invest in emerging green technologies.
The €11 billion to be invested by ESB in its Networks will ensure continued efficient delivery of the vital infrastructure needed to support the Irish economy. It will also facilitate the development of up to 6,000 megawatts of wind on the island.
ESB will maintain its market share of power generation at well below 40 percent to facilitate continuing competition in the energy market. Completion of the present closure/divestment of 1500 megawatts of its stations and sites will assist this process. ESB will continue to enhance plant availability and performance in line with EU norms.
ESB will drive substantial cost reductions in overheads across all its businesses in order to meet its new financial challenges.
Posted by Greenbang on March 31st, 2008
Well not all of you have that much, but a good number do.
It’s been absolutely fascinating looking at the reader survey. We had no idea so many people tuned in so regularly or what their backgrounds were, but we’ve had a fantastic response.
So let’s kick off:
Most of you are employed (77%) and the rest of you entrepreneurs work for yourself. One-quarter of respondents described themselves as professionals, with a further fifth describing their job as CEO/MD or a business owner.
Just over half of the respondents (54%) said they had control of a budget within their
organisation and had purchasing authority for new technology. But only one-third had a specific allocation in their budget for new technology to improve efficiency and/or sustainability, suggesting people are still unsure of what to do for their companies in the green space.
The budgets readers control or influence are pretty big. For those that did have specific budget allocation for sustainability and efficiency technology, 18% had around $1m or less to spend, while a lucky 9% had between $1m to $5m.
Two-thirds of visitors go to Greenbang.com at least every couple of days, with almost a quarter
visiting daily. Most visitors access Greenbang.com directly from their PC. One-third of respondents said they received the newsletter, and-one quarter aid they accessed the site via RSS feed as well as visiting the site. A minority of folk use the social network bookmarks (Digg and StumbleUpon buttons at the bottom of every post.) - we highly recommend you use these.
The majority (47%) of visitors think that Greenbang is a very good or excellent source of information on environmental business and technology. Some 13% say it’s better than that, while 34% say it is good and 6% said it’s average. No one said it was poor or very poor so we must be doing something right.
If that’s the case, advertisers should take note 
In terms of stories or topics our readers would like us to cover in the future, we heard some very interesting ideas. Here’s a couple we liked:
- Bjorn Lomburg - please discuss the argument that environmental commentators have such a vested interest in the stories they write that the balance of reporting is being unduly affected.
- Challenge more that is put out in the name of green to make sure that it’s not mainly just to profit from it. Seek out those making a real impact on the public… and their futures. Not just a pre-AGM bit of CSR PR puff. Delve for the actual enviROI+.
Other comments included:
• All good stuff
• Easy to read - excellent reporting - fair but doesn’t lack human emotion
• Good reporting, nice writing style, refreshingly serious but funny too!
• Good tone and general banter
• Good website, interesting stories, always updated
• Good, informative writing.
• Great design and great articles!
• Great short articles
• Great techie stuff
• Great writing style, good broad selection of topics, right length of articles
• Humour. Can’t beat it. Good variety. Quizzical tone. Experienced knowledge base to provide a fuller back story.
• I like the stories you do have. I do tend to drift more to things in my area…the pacific NW.
• I love the slightly irreverent approach to writing the news, plus the insights and links with all
activity that’s going on in the sector
• Informal writing style, good balance view
• Lot of update
• Lots of stories, mostly interesting
• Meanwhile I’m satisfied
• Most things
• Newsletter - Great tone - very refreshing to read - the right level of detail without going overboard.
• Pithy, topical
• The energy you out in and the volume of stories.
• The site is clear and easy to navigate. Regularly stories appear on Greenbang before they have been picked up by “older” IT media, so reading it is a great way to be a know-all when the story finally hits…
• Better spell checking
• I haven’t accessed the site but will have a look now. But I like the newletter as it means I don’t have to be proactive!
• It’s pretty good as it is. More staff to give a broader cover I guess?
• Keep up the good work
• Keeping it simple concise we all have too much to read these days
• Move up the category listing so people can have a quick overview of the topics and perhaps a date on the article summaries or articles from today/yesterday to make it ‘current’
• New format of site means you don’t see all the stories easily like in the previous blog version
• Seems pretty good. If it ain’t broke…
• Some of the articles can drag a little. Keep it brief and pithy. Side boxes are great for
providing extra info for more indepth readers, but keep it out of the main article.
• Some posts could be a bit longer, on average the stories are pretty short and sometimes a meatier article would work
• The tone of the site, the “edge”, the wit, etc., causes me to fatigue.
• Think it’s pretty good as is!
Posted by jumperhead on March 28th, 2008
As Greenbang’s dear old Gran used to say ‘Where there’s carbon offsets, there’s brass’. Okay, Greenbang’s Gran didn’t exactly spout that aphorism, but it would seem that JPMorgan has taken that piece of financial wisdom to heart. The investment bank has just gone and acquired ClimateCare, a UK carbon offset company, to add to its stable of carbon cutting businesses.
ClimateCare’s acquisition by the moneyed-up City Boys at JP Morgan means that it will be able to roll out even bigger and better initiatives than previously possible, while JP Morgan will get deeper into carbon offsetting and trading.
No word on how much the decade-old company will lighten JP Morgan’s wallet by. As part of the deal, JP will also get its hands on ClimateCare’s project sourcing arm, Pioneer Carbon.
According to analysts Point Carbon, the global carbon market will see 4.2 billion tonnes of carbon emissions transacted during 2008, up 56 percent on last year’s figures. At current prices, this values the market at $92 billion. No wonder then that the boys at JP Morgan want to grab themselves a chunky slice of this money pie.
Posted by jumperhead on March 28th, 2008
As a youth, Greenbang and Greenbang’s fellow school mates would spend countless minutes (hey, we had short attention spans) turning our calculators upside down and trying to spell out words on the display using the inverted numbers. We managed the greetings ‘hi’ and ‘hello’ as well as the biologically puzzling ‘boobless’. We also managed ’shell oil’.
These days of course calculator wielding terrors would have to spell out spell out ’shell biofuels’, after the oil giant teamed with Virent Energy Systems to create a joint venture charged with “converting plant sugars directly into gasoline and gasoline blend components, rather than ethanol”.
Apparently, not only will the fuel appeal to ants with its sugary goodness, it will be able to be used at high blend rates with normal fuels so engines wouldn’t have to be reengineered.
So how does it work? Shell says like this:
Virent’s BioForming platform technology uses catalysts to convert plant sugars into hydrocarbon molecules like those produced at a petroleum refinery. Traditionally, sugars have been fermented into ethanol and distilled. These new ‘biogasoline’ molecules have higher energy content than ethanol (or butanol) and deliver better fuel efficiency. They can be blended seamlessly to make conventional gasoline or combined with gasoline containing ethanol.
The sugars can be sourced from non-food sources like corn stover, switch grass, wheat straw and sugarcane pulp, in addition to conventional biofuel feedstock like wheat, corn and sugarcane.
The companies have so far collaborated for one year on the research. The BioForming(TM) technology has advanced rapidly, exceeding milestones for yield, product composition, and cost. Future efforts will focus on further improving the technology and scaling it up for larger volume commercial production.
