Cleantech: Can’t Change the forces of Physics or the forces of the Market

 “Save the Planet”.  Now that’s an admiral goal.  What’s next?  “Save the solar system”?  In all seriousness, inventions and innovations that reduce energy consumption and CO2 emissions are worthy goals.  But, just as the cleantech entrepreneur needs to address the laws of Physics they need to address the laws of the Market. 

New technology adoption, in any market, must address fundamental forces to succeed.  Cleantech, like every other market faces the classic  S-Curve and Gaussian adoption curves.   Both of these models address that fact that customers have implemented the current generation of technologies and solutions.  They are familiar with them, they know how to manage them and they have paid for them. 

The cleantech entrepreneur must develop, and articulate, a solution whose value proposition is so compelling that customers will risk, yes risk, the implementation of them.  Very few, there are some, will implement a cleantech solution only to “save the planet”. 

The entrepreneur must ask three basic questions:

1. Can my target customer make money with my innovation?
2. Can my target customer save money with my innovation?
3. How easily can my target customers implement my innovation?  

If the answer to both question 1 and question 2 is “NO”, then perhaps you should go back to the drawing board.   If the answer to either of them is “YES”, the answer to question 3 will determine your strategic marketing plans and your target “innovators” and “early adopters” defined the Gaussian technology market adoption curve made popular by  Geoffrey Moore.  The larger the effort to implement your solution the more compelling the value proposition must be.  

Energy Management in IP and Mobile Networks

Energy Management in IP and mobile networks is a nascent marketplace.  Why focus on this area?  First, the Internet is expected to consume 4% of the world’s electricity up from 2%.  Reductions in this area can have tremendous economic and environmental benefits.  Currently IP Traffic growth is exponentially outpacing energy efficiency in both fixed and mobile networks.  A small percentage of energy savings translates into $Billions in energy cost.  Savings here, as in any OPEX, results in cash delivered to the bottom line.

Second, sustainability for service providers and large companies is moving beyond saving money to becoming a strategic competitive advantage.  Consumers demand “green” and sustainability enhances the brand.  With a “bit” being a “bit” and a “packet” being a “packet” the brand image is critical to capture and retain customers.  Additionally, the global financial markets now link sustainability to management sophistication.

This is an emerging area which will be covered in depth in the new sister publication:  Greywhale Research.  Contact me for more information.  gwhelan@verizon.net 

Cleantech: Into the Board Room

It seems to me the cleantech  or sustainability are turning a corner.  No longer is it about just Saving The Planet.  It’s about economics and business strategy.  Cleantech will become a real economic force because companies will be able to make money or save money or both.   With global economic turmoil and hyper-competition companies that have a sustainable cost advantage will thrive.  In markets with little differentiation brand power is paramount.   Real and provable eco-friendly branding will increase this power.   Now, these discussion need to move into the board room and become cornerstones of corporate strategy.

Cleantech VC Investing Paradox

Cleantech VC Investing Paradox

It seems to me that the tier 1 VC investing in Cleantech is caught in the middle. Let's assume that the VC wants to invest $10 Million through the various rounds. On one end of the spectrum are the "home run" major impact clean energy companies. These companies are going to require $100's of millions in capital to reach profitability. For the Tier 1 VC this would imply they would need to invest ~$5 M in the company at an earlier stage of development than they traditionally invest in.

On the other end of the spectrum are the many companies/technologies that have an interesting product that works as planned, but will never be widely deployed. These companies can reach the market deployment stage, maybe profitability or perhaps be acquired with less the $2 million in invested capital. Likely an angel, sophistical angel investment or government grant company.

Thus, the Tier 1 VC is troubled to find a cleantech investment that meets their criteria.

Thoughts?