Growing returns in clean technology

Jon Guice

Among all the nations of the world, the United States has an extraordinarily large and well-developed venture capital sector. Business-plan competitions play an established role in the industry: by vetting companies seeking venture funding they introduce pre-qualified entrepreneurs to investors and, along the way, inform and educate both groups.

The Cleantech Open, a nonprofit organization that runs a national business-plan competition each year for cleantech start-up companies, provides competing teams with training, mentoring, introductions to potential customers and funding sources, and—for those companies that win—publicity in high-profile events and press announcements. The connections extend beyond the circle of winners to a growing, loosely knit community of entrepreneurs and inventors, business angels and venture capital groups, as well as the more established companies and organizations that sponsor the program.

The first competition was held in 2006 in California. Since that time, the Cleantech Open has worked with about 200 contestant companies and expanded to the Pacific Northwest, the Rockies, and the North East and North Central regions. The organization plans to grow to other regions, both nationally and internationally.

Now the Cleantech Open is aiming to expand—not only into new geographic regions, but also in its role into the lifecycle of companies, working with the growing pool of ‘alumni’ companies that have entered the competition.

In 2009, the Cleantech Open held the first “Global Ideas” competition, drawing entries from as far away as Brazil, China, Denmark and New Zealand. The winner was an algae biofuels company, Bio-Lípidos of Puerto Rico.

In addition, the Cleantech Open is expanding its role in the evolution of the companies that enter the competition. Today the Alumni Program tracks the progress of finalists, producing statistics, a directory, and selecting a few companies for published profiles and achievement awards at the yearly awards ceremony. This monitoring of ‘graduates’ not only helps make the case for the Cleantech Open to sponsors and other supporters, but also addresses the broader mission of the organization to advance the entire cleantech venture community. As executive director Rex Northen noted when announcing the 2009 winners, “While this marks the completion of our annual competition, it is only the beginning for this year’s semifinalists. As Cleantech Open alumni, we will continue to help them successfully commercialize their cleantech ideas and create jobs.”

The Cleantech Open is exploring ways to expand support and monitoring of ‘alumni’ companies. One idea is to increase the exposure to and involvement of sponsor companies such as Chevron, which could play several roles: industry advisors, business partners, investors or acquirers.

Another idea is to expand educational communications about alumni companies. Case studies of graduate companies, for example, would serve to inform potential customers and business partners about the products and services, and innovative companies, that are available and becoming more mature. Information on past contestant companies could also be valuable to entrepreneurs seeking to learn how cleantech startups have developed successfully.

Since alumni companies are by definition older than current contestants, any case studies are likely to feature more customers than earlier-stage ventures have, and they are likely to be of interest to larger and more conservative potential customers. If Wal-Mart, for example, is interested in a new product or service to offer on its stores’ shelves or to green its operations, it will probably be interested in a company with a list of customer implementations to its name.

For example, Power Assure, which saves money and reduces the energy footprint of companies by regulating power use in large computer operations, won in 2008 in both the energy efficiency category and for its environmental sustainability—largely on the technical potential of the company’s offering. Today Power Assure has a growing list of customers, including larger companies such as Accenture, and represents a credible option for established companies interested in greening their computer networks.

As the Cleantech Open matures, along with its growing base of affiliated professionals, graduate companies and the clean technology sector in general, we expect to see the results accumulate and expand from the entrepreneurial sector to the entire business community. Clean technology, and the Cleantech Open, is on a path from investment to returns: bringing new ideas to market, protecting the environment and making money.

Jon Guice, Jaclyn Pitera and Anneke Hohl are staff members of AltaTerra Research, a consultancy specializing in product innovation and market development in the business marketplace for clean technology solutions. AltaTerra’s main office is in Palo Alto, California.