Six Quick Questions: John Miner

John Miner co-founded Portland-based Pivotal Investments in early 2009, after leaving his post as president of Intel Capital. At the time, the nascent fund had $17 million under its belt and a mission to invest in early stage clean technology companies in the Pacific Northwest.

Nearly two years later, Pivotal’s fund is about 60% deployed, with a portfolio that includes stakes in Soil Information System, a developer of tools for agricultural analysis of soil and topography; TUUSO Energy, a builder of mid-sized solar power plants; and Emme, a provider of energy management applications.

Pivotal typically invests about $1 million in initial rounds and a total of about $3 million over the life of an investment, says Miner, who runs the fund with fellow co-founders and managing directors Gregory Semler and Bradley Zenger. The trio is mulling a sophomore fund in the range of $75 million, which it will likely start to raise next summer.

Senior Editor Joanna Glasner caught up with Miner to ask him six quick questions.

Q: What motivated you to start this thing?

A:

The primary thing that motivated us to start Pivotal Investments was, No. 1, a strong belief that there was a really big opportunity in cleantech for a long time to come and that there wasn’t a single cleantech early stage venture fund operating in the Northwest. So we believe we can have all the deal flow to ourselves.

Q: How’s deal flow?

A:

It probably averages around 30 deals per month—sometimes 40 deals. I think that’s pretty typical of the venture business, and our investment rates are pretty typical, too.

Q: What about valuations?

A: We see very reasonable valuations. It’s actually one of the benefits of where we are. It’s an area that’s undercapitalized. It doesn’t have any of the hallmarks of being over capitalized. We’d like to see more capital here, because you need more capital. We can’t fund all these startups ourselves, and we want to syndicate.

Q: What kind of edge does the Pacific Northwest have in cleantech?

A:

One of the strengths of the Northwest is you have an early adopter base in the cleantech space, so a startup has access to customers who are inclined to test and try new products. For example, the largest developer of LEED construction is located in Portland. And you have a very high renewable portfolio standard.

Oregon has also attracted a ton of solar manufacturing. Part of that is because Intel’s biggest facility is outside Portland. As semi fabs get old, one of things you can do with them is make solar cells, so there are a half dozen makers of solar cells and panels.

Q: Your first fund was quite small. Are there plans for a larger second one?

A: We do plan to have one and will probably start the process in the next four to six months. We’re still discussing size, but in broad strokes it’s probably in the $75 million to $100 million range.

Q: What are your thoughts on the exit outlook for cleantech?

A:

We haven’t had an exit yet. It would be nice, but we’re only two years in. But this is the billion-dollar question, and I’m just another voice in the opinion column.

I don’t see cleantech exits looking any different from any other exits. So companies that get to $75 million to $100 million in revenue, plus are profitable, will be targets. But that takes time. These [cleantech] companies have yet to reach that level of maturity. For now, M&A is probably going to be the predominant vehicle for exit.