Notes from peHUB Cleantech Event

Photo by Helen Fairman of Millville Partners

Great to see so many of you come out last night, for peHUB’s Boston cleantech event. The specific focus was on federal financing and regulatory issues. A few quick takeaways from the panel (from memory, since it’s hard to take comprehensive notes and moderate at the same time):

* Lot of discussion about how cleantech is a difficult business for early-stage investment, in that company maturation can push the limits of a traditional VC fund structure. Roger Berry of C Change Investments noted that some infrastructure funds in Europe are actually proposing 15-year or 20-year investment cycles. Hadn’t heard that before. Would make sense from the perspective of matching the money to the opportunity, but I’m not sure any LP would be willing to assume that a core group of partners would stick together for two decades (particularly given that anyone worth investing in for that long already has some career miles under their belt).

* Most panelists believed some sort of climate bill would pass this year, although not much agreement on its contents (concerns that divisive healthcare debate is setting the stage for divisive energy debate). Also heard a few comments about how something like a Green Bank would make renewable energy companies more competitive with oil & gas, which already receive massive federal subsisidies.

* Scott DePasquale of Braemar Energy Ventures backed A123 Systems when he was with GE, and then again with Braemar. He says that the company would still be in business sans the government grants, because the existing investor syndicate would have been willing to put up something approximating the original IPO target (assuming no IPO yet without the grants).

* General agreement that cleantech entrepreneurs should not base their business models on government funding, particularly since awards often seem haphazard. At the same time, however, the feeling that that entrepreneurs need to spend at least some time in DC – meeting with staffers or others for the purpose of explaining their business and learning about the different funding and regulatory issues that could affect them. And, remember, not all grants are created equally.

* An audience member asked what one thing Obama could do to support cleantech. Rob Day of Black Coral Capital answered that he should form an investment matching program modeled after OPIC.

* It’s been suggested that cleantech is the next Internet, vis-a-vis VC returns (think it was John Doerr who first uttered it). Wonder if the statement is correct, but in reverse. VCs made lots of money early on the Internet, and then took massive losses. VCs investing in cleantech may take their losses first, and profit later.

* Best part about our panel was that the panelists asked questions of one another and disagreed with each other. Cannot stress how deadening it is when a moderator asks a question, a panelist answers and then everyone looks back at the moderator for the next question. This group got that. Wish more did…

* HUGE thanks to law firm Bingham McCutchen, which hosted us in their Federal Street facilities. Great view of the city, quality booze and tasty lollypop lamb chops.