Ontario takes charge at the Cleantech Forum, leaving others green (with envy)

Cleaning up in SF

Two weeks ago, the Cleantech Group hosted its annual west coast Cleantech Forum, the largest annual investment conference focusing on the cleantech industry. This conference, in the heart of the venture community in San Francisco, has been a successful launching pad for start-ups raising investment, as well as an opportunity to discuss industry trends and risks. While information was insightful and the networking opportunities were numerous and valuable, the message I took away from the Forum was that it is becoming increasingly evident that Ontario is succeeding in positioning itself as the North American leader in this space, as evidenced by the following:

• Of the presenting companies selected from across the globe, nearly 1/3 were from Ontario, and most of these were MaRS clients (potentially part of the reason we were identified as a top cleantech cluster organization by Cleantech Group):

Bluezone Technologies Ltd – has developed an anesthetic gas/emissions capture technology for the healthcare industry

Hybrid Energy Technologies – has developed battery/energy storage technology, building upon proven rechargeable alkaline battery chemistry

Power Panel – has developed a more efficient, longer lasting and less expensive solar thermal panel by replacing the use of metals and plates with plastics

ReDriven Power Inc – is a manufacturer and distributor of small wind turbines

Sempa Power Systems – has developed a solution for effective real-time systems regulation on the grid by networking complementary distributed loads and generation

Vive Nano – has developed a nanomaterials system for altering the properties of compounds of interest to enhance their benefits or reduce their side effects

• Investors and technologists were aware of the Green Energy Act and the favourable market condition it has created up north (many expressing envy at our governments’ leadership in this area). The same sentiment was echoed at the recent Green Energy Act Finance Forum, but it’s still nice to hear the same response away from home.
• SDTC had a large presence and is becoming well known for vetting and supporting promising cleantech opportunities.
• The OETF showed some traction with local investors and could be a powerful mechanism to entice foreign investment into Ontario companies.

Sometimes one has to go away in order to appreciate how good things are at home. After this trip, I was very proud to be a part of the movement happening in Ontario.

Death by pilot

In a sign that the industry is starting to come of age, the theme of the conference was “Taking Cleantech to Scale.” This transition, akin to crossing the chasm – moving from visionaries to pragmatists – has brought with it a whole new set of challenges that inexperienced technologists and entrepreneurs did not fully appreciate. Many entrepreneurs who have entered this industry after having success in ICT, are not used to the how conservative the energy industry is and needs to be. Coupled with a tightened credit market, capital is increasingly difficult to obtain for risky projects.

Leading into the conference, a recent story in Tech Review illustrated this point, where a major solar generation project couldn’t attract significant private and public funds without being technologically derisked – through a major 18-month-long pilot. The firm was fortunate that they were able to get support from a developer on the pilot, otherwise they would still be stuck in the lab with a great technology and no customer willing to touch it. The endless pilot phase has crippled several in industry, leading to the concept of “death by pilot,” where multi-year trials drag on, draining a start-up’s coffers and ultimately starving them to death in the pursuit of “sufficient validation.”

During a panel on financing solar at scale, panelists stated that, from a project finance point of view, further technology innovation is not the answer. A large project won’t get financed without proven technology, so expect lots of time spent in the field under real-world conditions before a commercial scale project will be an option. This sentiment exactly echoed a discussion at MaRS at the Green Energy Act Finance Forum – with respect to financing a wind farm, you want to reduce the technology risk to zero. From a financier’s perspective, you shouldn’t do something foolish like choose a new (unproven) technology.

The message from both events was clear: If you’re going after the big play – large scale energy production – leverage your partnerships early to offset pilot costs. Project finance won’t be an option until the technology has been operating for a few years so make sure you have the capital to survive the drought (of capital) and succeed when the rain finally comes.

Further resources:

• Watch MaRS Cleantech TV (on Vimeo) for more GEAFF highlights
• MaRS makes list of top 10 cleantech cluster organizations for 2010 (Cleantech Group)

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