Orrick: What subsectors of the cleantech market are you
looking at most closely now?
Ullas: We are
continuing to look for new breakthrough technologies in solar, biofuels
and bio chemicals. We are also looking for innovative companies
in lighting, business intelligence in the energy markets and in energy
efficiency applied to the grid and to the built environment.
Orrick: Do
you focus on a couple of subsectors and technologies of the
cleantech market at a time? Are there subsectors that
you look forward to focusing on 12 months from now?
Ullas: We
look at all the markets listed above. We will continue to look at
those spaces over the next few years. An area that's also of
interest to me over the next few years is affordable consumer-oriented
energy generation technologies such as fuel cells.
Orrick: What advice do you have for
companies seeking Globespan capital?
Ullas: My
guidance would be this - if you have a breakthrough idea in the markets
listed above and have a passion for building significant companies that
contribute towards changing the energy mix of the world towards
sustainable sources, then please come talk to us. We will work
with you to strategize on how to build a very meaningful company in a
capital-efficient manner.
Orrick: Are you starting to see repeat entrepreneurs in
cleantech? Are we starting to see the beginning of a community of
successful cleantech entrepreneurs who can provide industry-specific
advice and contacts to the next generation, like we do in IT, or are we
not quite there yet?
Ullas: I do
not believe we are yet at the point that we have a flow of serial
cleantech entrepreneurs. That said, I am confident that in the
next 2-3 years, as some of the leading cleantech startups begin to go
public, they will graduate many entrepreneurs and managers who will
have gone through the experience of having built the first generation
of successful cleantech startups. They will have the benefit of
going through the experience of building these companies through some
very difficult times in the last couple of years when the financial
markets became very challenged. Access to this set of experiences
will be invaluable for the current and next crop of cleantech startups.
Orrick: You made your first cleantech investment in
Calisolar about 5 years ago. That was back when the investment
community was formulating its first hypotheses about the nascent
cleantech industry. What lessons do you think we've learned about
cleantech companies since that time?
Ullas: The
most important lesson has been around the challenges of finding capital
to help our companies through the scale-up of their manufacturing
plants. When the venture industry had begun investing in
cleantech in 2005/2006, there was an abundance of capital for
manufacturing operations. However, once the financial crisis
occurred, all available capital was sucked out of the system. As
a result, the venture capital industry had to invest significantly more
than it is accustomed to (or had anticipated) in those companies.
This has resulted in a subsequent search for more capital efficient
business models in which to invest. Another good lesson we have
learned is the power possessed by the incumbents in the cleantech
space. In Silicon Valley, we are accustomed to the idea that
start-ups can take on an industry and disrupt the incumbents. In
cleantech, the incumbents have to be viewed as partners. Given
the capital intensity of the cleantech startups' manufacturing
operations, they often need access to the significant balance sheets of
the incumbents to help them scale-up their manufacturing. In
addition, the incumbents can often be the off-takers (customers) of the
startups' products.
Orrick: What are your views on the argument that venture
opportunities in solar are more limited now due to the large
scale manufacturing and low production costs achieved by Chinese
solar makers? Is it better now to be a solar developer
than a solar panel innovator these days?
Ullas: I
agree that the number of solar investment opportunities that require
significant capital expenditures for manufacturing (or project
development) are more limited today. There isn't much appetite
among the venture capitalists for those types of models. That
said, we have recently invested in two highly innovative solar
companies that are predicated on significant intellectual property
development and an outsourced (and thus capital efficient) business
model for manufacturing. We will see more of these types of
investment opportunities in solar, fuels, chemicals, etc. in the
future. By the way, I am not sure about being a solar developer
in today's environment either. The development business can be a
reasonable business, however it also requires a meaningful amount of
capital to be invested into it. If you're an entrepreneur who
wants to change the energy landscape in the world, the opportunity
still lies in developing breakthrough innovation.
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