Water Investing on the Brain

I've got water on the brain these days. Especially water investing opportunities. In part, because I'm moderating a panel on water investment this week.

The panel is a mix of private and public market experts, including Judson Hill of NGP Global Adaptation Partners, William Brennan of Summit Global, Kevin Brophy of Meidlinger Partners, and Karl Kyriss of Aqua America. 

You can register for the event, which takes place on Thursday, January 27th, 11:00-1:30 PM, in Philadelphia, here.

One of the topics of our conversation will be the perceived barriers to entry in water investing.

Many investors simply don't understand the water space and that keeps them out.  Some feel the barriers to entry are too high.  For example, here are three things commonly heard:

1.) "The water business is too fragmented to allow new technologies to scale."
2.) "Water is a highly conservative, public sphere" – even investor owned utilities seem to have that stigma – and "the sector lacks innovation and money."
3.) "Water technologies take too long to be adopted" in the sector (thus, water doesn't fit well into the typical VC model).

While water is a $500 billion/year industry, it garners a little over $120 milllion in venture capital funding, according to Global Water Intelligence.  This can only grow if investors are educated to reduce their fears of getting their feet wet in water investing.

And like the surge in energy interest over the past decade, I think interest and money will eventually flow into water and flood over time. (Pun intended.)

Increased awareness about water shortages and scarcity is driving innovation as everyone looks for ways to use water smarter and more efficiently.

Other innovations that seem poised for potential investment include desalination, water management devices, reuse and recycling, filtering, leakage sensor technologies, and agriculture.

Demand for clean water in developing countries is on the rise – and will be increased if climate change impacts snow pack, glacier-fed streams, and aquifer recharge.

Water is getting more expensive and is increasingly being seen as a valuable commodity rather than a cheap, easily dispensable resource. As a colleague in the space said to me a few weeks ago, most of this is being ignored by the investment community other than a handful of big players. 

And most of those are not based in the US, with the recent exception being some of the biggest names in the VC business: Khosla, Kleiner Perkins, and Draper Fisher Jurvetson. 

Assuming others will try to catch their wave, Jud Hill may be right in saying that "Buckets, buckets of money" can be made in water," as he told a meeting of bankers and investors in Geneva last November.

The event is jointly presented by Cleantech Alliance Mid-Atlantic and the Greater Philadelphia Alliance for Capital and Technologies, and sponsored and hosted by MorganLewis.

(Disclosure: I am a co-founder and board member of the Cleantech Alliance Mid-Atlantic, a business network for cleantech professionals.)

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Green Skeptic Friday LinkFest - 12/17/10

Festivus Pole Lot, Milwaukee, WI

Time for Friday LinkFestivus!

First, Nissan delivered its first LEAF electric vehicles this week. Here is a video of the press conference in San Francisco: LEAF Lands

And in case you missed Nissan's polar bear commercial for LEAF, which has its fans and detractors (we think it's all in good fun): Polar Bear Hug

Speaking of polar bear habitat, if global warming is melting the Arctic, will Santa Claus go out of business?

There's been a lot of discussion about the a new, more realistic conversation starting to happen around energy:

Here's Andy Revkin on An Energy Menu for That Works for the Long Haul. The comments are worthy reading too.

And my take from earlier this week: It's About Time

The New York Times reported on the US Energy Department's prediction that the price of natural gas and electricity will be low over the next quarter-century, and crude oil will become more expensive but not radically so, contradicting some widely held notions: The Energy Future Ain't What It Used To Be

The myth of China’s switch to so-called clean energy has been "blown right out of the water," according to research by HSBC Bank: China's Coal Rush

One of our favorite green bloggers, Shari Shapiro, sheds light on the green impact of the stimulus: It's the Economy, Stupid

VantagePoint Venture Partners reportedly is raising a $1.5 billion fund to bridge the manufacturing gap of cleantech startups: VantagePoint. VantagePoint has been an investor in Tesla, China's Goldwind, BetterPlace, and MiaSolé, among other cleantech companies.

Kleiner Perkins debunks rumors that they are getting out of the greentech investing business. Greentech Media reports the firm made an investment in home energy efficiency player OPower as part of a $50 million round (along with Accel and NEA), and has joined Google Ventures investing in solar SaaS firm Clean Power Finance.

Finally, Heidi Moore, our favorite self-professed "handmaiden to capitalism," pointed us to this hilarious Xtranormal video about the plight of reporters faced with PR agents from hell:




Have a great weekend!

New Energy Symposium 2010

This year's New Energy Symposium took place last week at the New York Academy of Sciences' lush office and conference space at the World Trade Center in New York.

Co-hosted by the College of Nanoscale Science and Engineering's (CNSE) Energy and Environmental Technology Applications Center (E2TAC), along with New Energy New York, a consortium of New York State-based energy technology organizations, the two day event featured panelists from industry and government, as well as investors and academic institutions, along with over two dozen presenting companies.

More than one jeremiad was tossed out by the speakers. Most agreed that the time is now to seed the opportunity and not cede it to other countries (China and India were among those cited).

As Dr. Pradeep Haldar, director of E2TAC and head of the Nanoengineering Constellation at University of Albany's CNSE, reminded the attendees, "We are falling behind the rest of the world by $240-260 million in terms of investment in cleantech."

Several presenting companies hope to get a piece of that investment pie and hope that it grows. Highlights among the companies include: Algal Scientific Corporation, Ener-G-Rotors, and Energy Materials Corporation, which were the three "most promising companies" chosen by the extensive panel of investors, including David Wells from Kleiner Perkins, Alex Kinnier of Khosla Ventures, and Annachiara Danielli of Golden Seeds.

Other companies of interest included Paper Battery Company, InnoSepra, and three NYC ACRE tenants, Wind Products, Sollega, and Rentricity.

My three take-aways from the two-day conference:

1.) Time-of-use pricing is essential to make the Smart Grid work and to manage pricing and habits;
2.) Storage to balance the load and demand is essential -- and large increases in intermittent generation (from distributed sources and Battery Electric Vehicles) will increase this need; and
3.) Energy efficiency is still the low hanging fruit and has still not been picked.

The bottom line? While progress has been made towards the new energy future, we've still got a long way to go.

There was a healthy discussion about the role of Europe and India in the future of energy, but the elephant in the room was clearly China.

As Congressman Steve Israel put it in his keynote address, "China is our Sputnik. We need to see China's taking leadership of the clean energy arena as a wake-up call."

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Clean Tech: Kleiner Perkins raising a $400M-plus 'green growth' fund, says Venture Beat

Venture Beat reports that "Kleiner Perkins, the Silicon Valley venture capital firm that backed Google in its early days, is planning to raise a 'Green Growth' fund of more than $400 million, to invest in later-stage cleantech companies, according to PeHub.

"The move is a sign of the maturation and realities of the green technology industry. Many environment-related projects, including solar thermal, electric cars and bio-fuel manufacturing, require huge amounts of capital. Kleiner had earlier raised $200 million to invest in early-stage green companies, but it doesn’t have enough money to invest large chucks of cash in more mature companies as they move to manufacturing stage.

"According to the report, which we have yet to confirm, the firm may do select public investments, carveouts and spinouts.

"Kleiner has won considerable stature in the clean technology investing area, since hiring former Vice President Al Gore as a partner last year. Gore, a proponent of stronger measures to clean up the environment, won the Nobel Peace prize for his efforts. Apparently, Gore is among those leading the firm’s effort to raise the new fund."

According to PE Hub:

Al Gore is among those pitching it to [Kleiner’s] limited partners. During a recent LP meeting in New York, KP’s John Doerr reminded attendees that the firm had invested in the first commercial web browser just 14 years ago, which prompted Gore to caution Doerr against claiming credit for creating the Internet.

Doerr is expected to be involved in the project, but KP is also hiring a dedicated team with more experience in late-stage finance.

"They recently hired a team from the Goldman Sachs Special Situations Group that did the initial deals behind First Solar and Horizon Wind," says Anup Gupta, a partner with the Virgin Green Fund. "It was like a five-person team, [but] two left for Hudson Capital."

Is this an indication that Clean Tech and Green Tech is here to stay? We hope so. Bring on the New Green Economy.

Green is Good, baby.

Clean Tech: Al Gore Joins Kleiner Perkins as Partner

VentureBeat reports that Al Gore has joined Kleiner Perkins, the well-known venture capital firm that backed Google, Netscape, Sun, Amazon and many others.

Former Vice President and Nobel laureate Al Gore will join Kleiner Perkins as a partner, in what VentureBeat says is a "continued effort to ramp up its investments in the area of green technology. It’s the firm’s latest big name addition. It hired former Secretary of State Colin Powell two years go, and has an arrangement with former eBay executive and California politician Steve Westly, who works out of the firm’s back office."

"There’s an exclusive story in Fortune about Gore’s move, which contains a detailed description of the collaboration between Gore and Kleiner’s leading partner John Doerr. It’s a great piece, written in the classic, engaging style of author Adam Lashinsky." Here’s the opening, as quoted by VentureBeat:

After “a conversation that’s gone on for a year and a half,” according to Gore, he has decided to join his old pal [Kleiner Partner] John Doerr as an active, hands-on partner at Kleiner Perkins, Silicon Valley’s preeminent venture firm.

The move is more than another Colin Powell moment (the former Secretary of State signed on as a Kleiner “strategic limited partner” two years ago and has hardly been heard from since). Gore is joining the firm as Kleiner makes a risky move beyond information technology and health-care investing into the fast-growing and increasingly competitive arena of “clean technology.”

According to Doerr, by 2009 more than a third of Kleiner’s latest fund, which was raised in 2006 and totals $600 million, will be invested in technologies that aim to reduce emissions of carbon dioxide. Already Kleiner has invested more than $270 million from various funds in 26 companies that make everything from microbes that scrub old oil wells to electric cars to noncorn ethanol. Twelve of Kleiner’s 22 partners now spend some or all of their time on green investments.

"Doerr, in turn will join the advisory board of Generation Investment Management, the $1 billion investment company Gore started three years ago in London with David Blood — to invest in publicly traded “sustainable” companies, and Lashinsky’s piece has more."

Read the full article: VentureBeat