What Cleantech sector are the VCs after now?

Green building, Carbon IT, Food technology, Solar, which will be next.

As always, the venture community is looking for its next big thing. The cleantech world is no exception. Despite the dearth of exits, so much capital has flowed into the cleantech sector that investors need new places to put it. So despite my promise to certain friends not to blog certain funding rumors in each category, the top 4 contenders are:

Green building materials - I'm not sure it would be my thing, but investors across the board seem to think this area is ripe for a hit.

Carbon IT - With some sort of cap and trade a near certainty, the interest is picking up in one of the few areas in carbon that looks like a "venture bet". I should know, I have one of these companies myself.

Food related technologies - High food prices and rising fertilizer costs, what can I say?

N-generation solar technologies - Everyone not in the first wave is looking to get in to the 4th wave. Not sure venture investors will fare better in the 3rd or 4th wave than they did in the second, but they are going to try.

I had a chance to visit one of the Gaia Hotels, which bills itself as a new eco-hotel chain, this weekend. The experience put those four contending areas in a bit of a new light, as the creator of the Gaia ecotel concept toured me around and shed some light on the decisions that went into them from the demand side. (Note: "ecotel", "bit of a new light", "shed some light", "demand side", all good cleantechisms).

After launching a LEED Gold Certified facility in Napa Valley a little under two years ago, Gaia opened a new one in Northern California, focused on outdoor recreational travelers, which they expect to achieve at least LEED Silver. I had lunch with Wen Chang, the creator behind Gaia, this Saturday. When it came to green building materials, I was frankly amazed how much impact the LEED program had on the design and materials selection, and how big a selling point LEED was to this concept. Everything from using photovoltaic panels and Solatube daylighting, to low flow shower heads, low water usage and local landscape selection, and chemical free gardening and stormwater management, all the way to the carpet made from recycled materials, CFLs in the night stand, and sustainable forest products. Talk about demand stimulus, after an extensive tour, I was ready to buy a green building materials company myself. Especially since the ecotel was booked solid!

And of course front and center in the lobby, there were Renewable Energy Credits (though not carbon credits) purchased from our friends at Renewable Choice Energy, to offset the power usage, and a monitoring system to show power and water usage, and solar production.

Moving on to the food technology, the Gaia Anderson restaurant is not yet open, but is intended to be an organic and locally grown food (I assume that Napa will count as "local" for the wine, but I did not ask!).

No eco friendly building in this day and age would be complete without a solar panel on the roof. Gaia Napa's solar system is apparently providing 10% of the electricity needs on site, while at the Gaia Anderson, the panels have not yet arrived. But perhaps the most telling for would-be solar barons, Wen Chang did not know or care whose technology powered the solar panels. Only that they arrived and worked.

All in all, quite an eye opening one day "deep dive" into the demand side of the four top contenders for cleantech's next big thing. (Pardon the expression deep dive, I've always found that term amusing, especially since cleantech VCs use it all the time now to describe the 6 conferences they went to and 12 business plans they read to become an expert in, say, solar, so I couldn't resist.)

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding CEO of Carbonflow, founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of Cleantech.org, and a blogger for CNET's Greentech blog.

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About the author

    Neal Dikeman is a founding Partner at Jane Capital Partners LLC, advising the technology and venture arms of multi-national energy companies in cleantech. While at Jane Capital, he has cofounded superconducting technology company SC Power Systems, Inc. (now Zenergy Power plc), and wireless technology startup WaiterPad POS Systems, and he is currently involved in launching a new venture in carbon credits. Dikeman edits and writes the Cleantech Blog, where he has written extensively on biofuels, solar, and global warming.

     

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