As an investment category, cleantech has seen a lot of changes and surging waves over the years. Some boats have capsized, while others have changed course and veered off to safer waters. This happens in every investment sector. Those ventures that have stayed with the sector have very different-looking boats today than they once did—they’ve embraced new competencies, their navigation gear and instrumentation equipment now have digital signal processing and they now use data analytics to improve their efficiency and speed.
The cleantech sector has also attracted new entrants: corporate venture arms looking for core and edge innovation, funds with savvy crews of impact investors and entrepreneurs with complementary tools. These players have joined the sector because they can see past the waves, they are excited about the market opportunities and new strategies, and they recognize that the prize at the end gets bigger and more important with every passing storm.
I’ve been looking for a way to respond to a perplexing comment I heard from an investor last week. I was talking to this investor about the cleantech sector, but was quickly cut off and told that they invest only in the Internet of Things.
It seemed I had used the dirty “C word.”
Let’s not confuse means and competencies with markets and sectors. The last time I checked, a boat was still called a boat, energy was still energy, water was still water and a spade was still a spade. Yes, the details of how we get, use and deliver things have changed—as have the characteristics of how things perform as new business models and capabilities are applied. We may still call cleantech “cleantech,” but it now commonly involves networking both old and new physical devices with electronics, software and sensors. It involves competencies and methods we refer to as the Internet of Things and software as a service.
Many cleantech entrepreneurs are building physical infrastructure products, while many others are focused on creating value and services with data and predictive analytics—and today more and more of them are doing both. They are using data and connectivity as weapons in their businesses and are returning value to shareholders with both clean- and tech-enabled solutions.
We have seen the tide continue to rise in the cleantech sector. Cleantech investments outweigh any other category on The SVX and, from a public company point of view, the S&P/TSX Renewable Energy and Clean Technology Index has outperformed the broader S&P/TSX Composite Index with almost double the percentage return (year to date). You don’t even need to check the Internet of Things Index, as it didn’t budge from its position of non-existence.
MaRS Cleantech has seen entrepreneurs and investors create big opportunities by embracing change. Tech is enabling them to generate faster and higher impact results. MaRS Cleantech is now working hand-in-hand with our colleagues and mavens from the MaRS Information and Communications Technology group. And through our talent initiative, we have also helped cleantech companies hire more developers than any other position over the last year.
The landscape has changed and, although most investors recognize it, it is probably time for us to rally the cleantech community together to formally usher in the future of cleantech for those who haven’t looked under the hood in a while.
Hang on to your steel-toe boots and hardhats, and stay tuned—we’re rallying all of our cleantech friends across Canada and beyond our borders to do just that.