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"Get your stuff together before you meet with us,"
said Grant Allen of ABB Technology Ventures to an audience of entrepreneurs,
investors, and corporate leaders gathered at the offices of Pepper Hamilton in
Philadelphia last Thursday. "Do your homework. We're quite clear on our
web site what we do. And make sure you have a crisp, compelling script, and a
strong, committed management team."
This sentiment was echoed by Michael Smith, head of
Constellation Technology Ventures at Exelon. "You need to know your
audience," Smith said. "Talk to us like an energy company. We're
looking for ways to keep Exelon relevant."
The event, "Energy Giants: Looking for Innovative
Investments," was jointly sponsored by Pepper Hamilton and the Cleantech
Alliance Mid-Atlantic, and featured Sumit Sarkar of NRG Ventures, in
addition to Smith and Allen, on a panel that I moderated.
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| Michael Smith of Constellation Technology Ventures |
"Large companies aren't good at innovation," Allen
offered, "our goal is to be a thorn in the side of internal R&D."
Sarkar suggested that the venture arms of corporations can
sometimes be nimbler in response and are constantly scanning for technologies
that offer improvements.
Each outlined what they look for in a company and how much
they want to invest, their “bite size.”
There was, of course, some discussion about capital
"light" companies or technologies, but given the range of their investment
thresholds -- from $3M-$250M -- they understand the need for some capital
outlay.
While traditional Venture Capital (VC) has been pulling out
of the sector, corporate VC (CVC) has picked up some of the slack.
In 2012 for example, according to a recent study, of the
total $6.46B investment in the sector, $2.7B came from corporates, up from
$2.55B in 2010 and $1.7B in 2006. Q2 of 2013 saw CVC rise to 14% of total
venture investment in the sector vs. only 8% in Q1. And 107 CVCs made an
investment in the sector in the 1st half of 2013, versus 148 in all of 2012.
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| Sumit Sarkar of NRG Ventures |
Corporate VCs are a little less risk averse than traditional
VCs, in part because such companies are full of engineers who can scrutinize a
technology's before an investment is made, but there seemed to be consensus
that if the technology enables an existing technology perform better, it is
going to be worth a look.
All three investors agreed that networking and investment
pitch events can serve as a feeder for companies, but having an executive
sponsor is best.
The entrepreneurs in the room, representing everything from
energy storage to software that helps increase the efficiency of long-haul
truck drivers, seemed to nod in understanding or agreement.
At the cleantech CEO Retreat that I help manage for EY’s
Global Cleantech Center this fall, a recurring meme developed around elephants
dancing with mice. As small companies (the mice) began to dance with corporates
(the elephants) either as strategic partners, customers, or investors.
Some of the concerns for the mice, obviously, were around how not to get
crushed while dancing with elephants. But from the elephant side, how can mice
get noticed and have something relevant to share?
Hopefully, the panelists at last Thursday’s event helped
alleviate some of the stress between species on the dance floor.
