The Cleantech market has been littered with companies who have filed S-1s only to put any thoughts of testing the public markets on hold. But could the Cleantech IPO window finally be opening?
It is no secret that venture capitalists and investment banks are of a like mind when it comes to the narrowness of IPO windows. It isn't uncommon for the investment community to all rally around a suspected window and pull the trigger on public offerings.
What has likely been tough for the aforementioned companies and other 2010 or 2011 filers like Silver Spring, is that an elongated period between S-1 filing and first trade likely means they have been operating at a significant disadvantage as it relates to public relations. Most companies work to establish a steady drumbeat of communications heading into the quiet period so that they can continue with communications around normal business activities post filing. Some, however, don't understand the need to build out their communications infrastructure and plan first, and may handycap their sales and business development teams for long periods of time.
It will be interesting to watch Enphase, Enerkem and BrightSource as they start trading, and see if it opens the door for any others to file and follow. Although they all fall in the broad cleantech bucket, the companies could really not be any more different in terms of technology and business model.
Enerkem is a pre-revenue company that is working off of the "storied IPO' approach that is now popular with players in the biofuels and biomass industry. The idea is that you prove your technology at pilot scale and rather than try and raise hundreds of millions of dollars in private financing, you leverage a few strategic investors and an IPO to finance the capex-heavy buildout of operations.
Enphase is a commercially succcessful microinverter company targeting the residential and small commercial solar market. The company makes a high-value product that helps boost power from solar systems that might otherwise suffer from shading, cell or module degradation, etc. With PV module prices at record lows, adoption of solar in California, Massachusetts and other markets is expected to reach record levels in 2012 which should help companies like Enphase do well.
BrightSource is a solar thermal company that is looking to build massive power plants in the desert. Although they too are a solar company, solar thermal is a much different market than Enphase's carrying with it pretty intense project finance and capital investment requirements.
Different as they may be, the trading of three innovative clean technology companies is a good thing for the industry. It may help others raise public financing, and also help some later stage private companies that are looking to close that last round of financing finally find some willing investors.
Let's hope that any who follow these companies already have a good communications strategy and PR plan in place to support their businesses throughout the entire process.
It's not hard to get me excited about clean technology companies since I believe so strongly in their impact on the economy, the environment and the overall good of humankind. And at Schwartz MSL, we're fortunate to handle public relations for a number of true "platform" type of players that are not only selling products, but also providing the necessary "building blocks" to enable an entire ecosystem of third-party products and services, like Tendril (smart grid), Picarro (GHG measurement and isotopic analysis for food safety, emissions management, etc), Enviance (environmental compliance and emissions tracking), Leyden Energy (energy storage) and too many others to mention.
Virdia's successful ramp up can come none too soon, as the market needs a scalable, cost-competitive and high quality supply of cellulosic sugars for the fermentation processes that companies use to produce biochemicals, fuels and nutritional additives. And it isn't just for the environmental good of society that we need cellulosics succeed--it is also important to the billions of private and public equity invested in companies like Amyris, Coskata, LS9 and others to deliver materials for sustainable product development.
Many of these companies launched on the assumption that cheap, scalable sources of cellulosic sugars would be a given. Unfortunately, that hasn't happened and this is where some companies launched the proverbial cart before the horse. The market has had to rely on corn and other crop-based sugars that suffer from price volatility related to the success or failure of short growing seasons, fuel prices, food prices, water prices and agricultural land prices.
Product manufacturers value cost certainty and long-term contracts, which are almost impossible when dealing with seasonal sources of sugars. The wood for cellulosics comes from sustainably harvested and replenished wood sources grown over multiple seasons, reducing exposure to weather and resourced-driven price fluctuations, to deliver a more consistent cost structure.
Cellulosics will happen and so will the categories of products they enable, and so the major question is (as Virdia's CEO Philippe Lavielle says), "who will win the sugar wars?"
The largest news in April for clean energy could have been Solyndra’s debt woes, a PR debacle that could prevent its IPO, result in millions of dollars of squandered federal funding and provide a massive PR salvo for opponents of government investment in cleantech movement.
CapeWind - This announcements is important in scope and, perhaps more importantly, precedent. Despite 9 years of protests from a wide-range of opponents, the federal government has acknowledged that our nation’s energy needs are more important than ideological or NIMBY opposition, no matter how heavy-handed. This is an important case for the PR and GR efforts for the entire clean energy industry. Hopefully this is the first of a number DOI-supported wind farms off the Atlantic Coast and in the Great Lakes.
DOE funding – This funding was for research focusing on electrofuels, batteries and carbon capture. From a PR point of view, this is a much-deserved acknowledgment of the importance and potential of these technologies, which often play second-fiddle to solar, wind and smart grid technology. And though the second fiddle status makes sense from a market maturity standpoint, these technologies still address important problems that require solving.
Amonix – Like most clean energy PR, “scalable” and “cost-reduction” are more important phrases these days than “break-through” or “cutting-edge”. Amonix, which emphasizes “scale” and “low energy production costs”, is an example in the shift in how companies position and market their clean energy technologies. Clean energy financing will likely continue this trend, as VCs demand quicker payback and more manageable reliable products. Schwartz is fortunate to work with several interesting companies in solar that are solving the scale and cost issues around traditional solar technologies.
What does this all mean? In a month where a cleantech bellwether fell on hard times, we saw a number of good developments that are fueling cleantech adoption and acceptance. This good PR for cleantech concerns across the board is more than welcome. Let’s hope it continues and reduces the squabbling over the long-awaited climate bill.
One quick hit this Monday morning involving a Schwartz PR client and the cleantech start-up world. Forbes created a slide show featuring the 12 hottest cleantech start ups according to SharesPost.
At SharesPost.com, you can find bulletin boards of private company shares, including offers to buy and sell in companies like Suniva, Bloom Energy, Amyris Biotechnologies, Altra Biofuels, Altarock Energy, eSolar, GreatPoint Energy, GridPoint and Bright Source Energy. These are some great early stage companies backed by a "whose who" of cleantech VCs, including NEA Ventures, Draper Fisher Jurvetson, Khosla Ventures, Kleiner Perkins, Lightspeed Venture Partners, Sequoia and others, in markets like smart grid, solar, biofuels and fuel cells.
As investors wonder about private company liquidity even amid some potential cleantech IPOs, secondary market options like SharesPost are stepping in. It is an exciting time to be at the intersection of clean technology and private equity.
The cleantech VC world will come together next week at AlwaysOn GoingGreen East in Boston, where the organization showcases the GoingGreen 50. Drop us a line if you're planning to attend, as Schwartz handles the public relations for that event.
It's been awhile since we posted on Renewablog and with good reason. After a very busy 2009 in which we saw the federal government's attitude toward renewables and cleantech change overnight, the blog team went on a short hiatus to focus on 2010 client planning.
It also served as good time to reflect on what worked in 2009 from a green public relations, government relations and search-engine marketing perspective, and what else needs to be done in 2010 by cleantech stakeholders. I think most would agree that 2009 ended much stronger than some would have anticipated entering the year.
Even with an underwhleming Copenhagen and the lack of a climate bill, 2010 holds a lot of promise. European and Asian companies continue to look at the US as TNBT in green adoption, even without a climate bill. The EPA's naming of carbon as a public danger and the willingness of the agency to enforce reporting rules has many saying it is only a matter of "when" and not "if" carbon emisssion reductions (CERs) become mandatory. Obama continued to accept and promote new ideas, like "Cash for Caulkers."
But even with some positive signs, there are some things that keep cleantech marketers and public affairs pros up at night, the biggest of which is the midterm elections. It is now unlikely that a climate bill will get passed in 2010. The big question will then be what will Congress look like when it takes up the bill in 2011? If the Democrats have significantly smaller majorities in the House and Senate, will a bill be so watered down that it will have little meaning?
The silver lining is that there are a lot of ways to skin the climate cat, including further EPA regulation or very aggressive, big economy states, like California and New York passing laws that become de facto national standards for cap and trade. The hope is that the federal government takes the renewable-powered torch and runs with it in 2011, but it is comorting to know that if it doesn't, there are ways to move climate measures forward.
So this is the backdrop as we approach the first two renewable energy shows of the seaon: Retech 2010 in Washington DC and Renewable Energy World in Austin. Both are interesting events that tackle very broad themes and market segments, including solar, wind, biofuels, waste to energy, waste heat to energy, geothermal and a number of others. Retech is a bit more policy focused, whereas REW will help shine light on Austin's rapidly growing cleantech credentials.
We'll do our best to take the temperature of both events and report back what we learn.
The last few weeks may have been the best PR stretch of 2009 for solar, wind and other cleantech and green markets, especially from a finance standpoint. It should provide a considerable uplift to spirits at AlwaysOn GoingGreen next week as the cleantech venture capital, private equity and investment banking community gathers to discuss industry issues in water, smart grid, energy management, solar, wind, energy storage and renewable fuels. Some of the positive news from the past few weeks:
-Treasury grants started flowing from the American Recovery & Reinvestment Act (ARRA), promising to fund a new way of renewable energy projects in wind and solar.
-Vinod Khosla's firm, Khosla Ventures, raised a $1.1 billion round which is expected to help fund dozens, if not scores or start-ups across the sector.
-Cleantech patents hit an all time high in Q2, showing that companies and entrepreneurs continue to innovate and that many new Green technologies are likely coming to market in 2010 and beyond.
That last bullet flew under the radar in many circles (a partner in a late stage VC firm I talked to said he had not heard anything about IBM's interest in water) and water as a whole gets less attention than energy on a national level. I am a firm believer that water is the next big sector that will attract massive investment and media attention, as the US comes to better understand that water is a national issue.
Couple all of these developments with Hara and other companies being successful in their fundraising activities, and you have what looks to be a significant financial thaw across various green industries. It could also be with Obama's speech on healthcare reform tonight that some form of bill gets passed and that the Energy & Water bill moves back to the top of the legislative priority list, which could result in the creation of the Green Bank and more funding avenues for cleantech companies.
With GoingGreen, PVSec, Solar Power International, Dow Jones Alternative Energy Innovations Conference, Power-Gen, Clean Tech Futures and a number of other events upcoming, we'll be able to monitor the impact of all of this news on the collective psyche of the cleantech market. It should be a fun final third to 2009.
**Schwartz Plug Alert**
We issued a release today highlighting the growth of our Cleantech & Green PR and Public Affairs Practice during 2009. We've become the Agency of Record for ten great organizations thus far in 2009, thereby doubling our footprint in the market. It's an exciting time to be in PR.
Schwartz represents a large patent and intellectual property firm, Finnegan, with an established Green industry practice, and we're guessing business has been pretty good for them and firms like them.
What does this mean? Well, we know that Cleantech and Green Venture Capitalists love patents since investing in companies without some legally enforced technical barrier to entry is seen as somewhat foolish. New technology development and a spike in patents could lead to an even bigger rebound in early-stage investing. And while the spike could have been driven in part by emerging-growth companies like Bloom Energy, it also points to the fact that large company R&D is likely increasing in cleantech, for example, automakers in fuel cells, GE and others in wind and smart grid, etc. It also could lead to future acquisitions of smaller companies with strong patent positions, by some of the larger companies in the market.
Many of these patent holders will also likely look for Department of Energy (DOE) grants and R&D grants from other government entities, in order to commercialize some of these technologies. This points to even more competition in the green public affairs world.
Overall, this is yet another sign that the cleantech financing environment and green PR noise will further rebound in 2010.
It has been well covered that VCs have poured billions into cleantech and green the last few years with markets like solar, wind, biofuels, smart grid and batteries receiving a good chunk of those investments. In fact, thin-film solar alone received several hundred millions of dollars in 2008, creating the potential for several big winners or losers among cleantech investments. Very respected firms like Draper Fisher Jurvetson, New Enterprise Associates (NEA), Khosla, Kleiner Perkins and Good Energies led the way, and many VC firms followed.
And while cleantech and green PR firms, the media and venture capitalists all did a great job publicizing the investments, there was an undertone of concern with regards to how the companies would deliver a return to their shareholders (VCs, entpreneurs and employees) and how well served the limited partner (LP) community would be by such investments.
With the credit crunch and struggles of the broader economy, many predicted a cleantech M&A shakeout that would last into 2010 before the market started a recovery. While there has been some M&A, the stimulus package, government adoption, follow-on rounds from existing investors and other measures have helped many cleantech companies weather the storm. So while private companies are not selling themsleves for dimes on the dollar (good news for investors), the market is still not strong enough to support a rash of cleantech IPOs. Or IPOs in Twitter, LinkedIn or Facebook.
So what is the best exit for some private cleantech company shareholders? Enter SharesPost and the hassle-free secondary market exit. The company brings together buyers (private equity firms, VC firms, high net-worth investors and the companies themselves) and sellers (angel investors, VC firms, entrepreneurs and employees) of shares in private companies to provide a third exit for private company sharesholders. SharesPost already has had one Tesla Motors transaction go to contract and escrow, and just released a third-party report on SolarCity which may help facilitate more trades. Multiple buy and sell posts exist for both companies.
Private company data has been a major missing component in facilitating secondary market trades in the past and SharesPost is looking to solve that. This will be a good thing for the market, as it will help keep executive talent working at emerging growth companies, versus seeing everyone head to larger cleantech companies like First Solar, GE and Applied Materials.
Expect to see more Cleantech companies on SharesPost in the near future as some of the market darlings realize they are in it for the long haul and founders, employees and early-stage investors decide they need liquidity.
A recent report from CleanTech Brief highlighted an increase in cleantech venture funding and investing to $1.2 billion. This was a quarter-over-quarter increase of 12 percent and illustrates that the green portion of the Stimulus package and other cleantech regulatory measures are helping to renew interest in cleantech start ups.
Companies in batteries, biofuels, smart grid and others were the main beneficiaries, including a $17.3 million investment in Control4. Solar investment is way down from past years, but it also saw an unprecedented run with nine-figure rounds. If the Intersolar 2009 conference is any indication, solar is surviving the recession fairly well with Uncle Sam poised to become the world's largest solar consumer.
Speaking of government green spending, more good news for the cleantech industry came from the G8 Summit, where leaders of some of the world's largest economies recognized the potential of the cleantech industry to help boost the global economy. The summit discussed cleantech policy measures, investment and adoption.
As we look at 2010, it is clear that world governments will spend unprecedented dollars on cleantech, energy efficiency, etc. It is also likely that other technologies will start to come to the forefront that have to date, gone under publicized, such as water desalination technologies and advances in tidal energy. All of this is pointing toward a much better second half of 2009 for cleantech companies.
According to a post on VentureBeat this week, cleantech stimulus funds targeted at wind, solar, smart grid, biofuels, carbon management and other key categories, will starting trickling into company coffers come September. New Energy Finance Group predicts that while some cleantech funding will flow in 2009 resulting in a thawing of bank loans and cleantech venture capital, the bulk of the money will be invested in 2010 and 2011.
As a result, September through December will likely be a critical time for cleantech companies in search of government investment or project financing, In addition to the stimulus money, the fourth quarter will begin the FY 2011 appropriations process in earnest. Cleantech companies will likely need to focus on public affairs and government relations during that time to take advantage of what could be the last budgeting cycle with a cleantech-friendly White House and Congress in control.
A new study covered by Kate Galbraith at the NY Times says that Green Collar Jobs grew twice as quickly as jobs in the rest of the economy from 1998-2007. Given that this study doesn't cover the hyper investment in solar, wind, smart grid, green IT, biofuels, geothermal, batteries, green autos, etc. during 2008, and the hiring that resulted, my guess is that the next study will show even faster growth over the past 10 years. Factor in green stimulus measures during 2009 and you likely have something approaching a Green New Deal.
It would be interesting to see what they specifically classify as a green job. Take Schwartz PR. We have more than a dozen cleantech clients and more than 40 people working with those companies. We couldn't say that in 1998, so technically they have been created by the movement to green products, services and technologies. My guess is that this study dramtically underestimates the number of people who have part or all of their employment driven by the growth in the cleantech market, especially people working in green pr, public affairs, marketing, legal services, media and investing.
How is that possible? Khosla says that Cleantech is not about solar, wind or biofuels, but about re-engineering the way society lives, from lighting to concrete. When asked about the size of the problem, Khosla says that he sees only opportunities. Furthermore, he talks about how clean technologies have to achieve unsubsidized market viability within 5-7 years or they will struggle to be an investment and commercial success. Overall, just a very interesting interview with someone with an amazing track record of finding breakthrough technologies and companies.
Do I agree with every thing Khosla says? Nope. However, I do agree that Cleantech is bigger than the Web. This is an important point since many have called it a fad.
Cleantech, green, sustainability or whatever you want to call it, deals with a number of fundamental issues that impact all aspects of human life. Examples include drinking water (desalination) and irrigation in drought-ridden regions of the world, transportation (biofuels, batteries, green auto), remote and distributed energy generation (solar, wind, batteries), manufacturing, consumer products, energy efficiency (smart grid, energy management), etc.
I also agree with him that every technology gets overhyped at some point and many cleantech PR campaigns have contributed to that problem by pushing hyperbole when there was nothing behind the courtain. Biofuels are feeling the backlash now and wind is starting to be questioned because of energy storage problems. But will they go away entirely or will they just evolve into something stronger, with savvy entrepeneurs overcoming many of today's challenges? I think it is definitely the latter.
Will the Cleantech movement create ten Googles? I wouldn't bet against it...or Khosla.
First, Scotland announces it is investing $8 million in algae and seaweed-based biofuels. The reason? Because those sources have no impact on food prices, don't contribute to deforestation and aren't subject to commodity price fluctuations. Bad news for palm oil and other biodiesel types, but good news for my kids which can't stand it when seaweed touches their feet while swimming.
Then Forbes follows with a story about how biodiesels companies are going to have to start shuttering their doors without government subsidies for the same aforementioned reasons. Executives of biodiesel companies using corn, switchgrass and palm oil have called the deforestation and commodity pricing objections baseless, but a major media and government education campaign will need to take place to change perceptions. In the meantime, it looks as though algae-based fuels, like those being developed by Solix Biofuels, are gaining favor with policy makers, commercial customers and biofuel advocates.
One other interesting story from this week is from Sweden where we have our European Green PR headquarters: apparently govenment approval is the only thing keeping Sweden from having the world's largest wind farm. A company called Markbygden Vind AB is planning to install a multi-terawatt wind farm in the northern section of the country. An interesting post from Dave Tyler of Green Options discusses how there is likely to be a race for the biggest wind farm.
With Wind Power 2009 coming up in Chicago in early May, there will likely be a lot of discussion about major wind farm projects and the public affairs and public relations challenges with getting them planned, developed and built.
Earth2Tech has an interesting post on the fact that the stimulus package and cleantech funding from the federal government may be starting to thaw the VC funding freeze. Three companies announced funding this week, which was newsworthy in itself. But also interesting is the fact that none of the companies were in solar and instead were in markets that took the brunt of VC indifference during Q1.
Wind, biofuels and smart grid were the three markets drawing interest from several noteworthy investors, including GE Capital, DFJ, Polaris and Altira Group, a slightly less well known cleantech and energy venture firm with a pretty broad portfolio. Altira invested in both Southwest Windpower and OPX Biotechnology.
The third company that received funding was Ember, the company behind the ZigBee wireless networking and control standard for smart meters. All three of the aforementioned markets, wind, smart grid and biofuels, stand to benefit from the stimulus package, including renewable energy and smart grid loan guarantees, tax credits, state energy projects and direct investment from the DOE.
We've talked before about how the Federal Government would serve as a bridge investor for the cleantech industry and eventually attract VC dollars back into the market. When companies can get capital from other sources that don't dilute company equity, it takes some of the risk out of the investment for private equity groups and VCs, while making the return potentially much more lucrative.
It used to be that PR was the engine that drove visibility with investment audiences. Now cleantech companies, including solar, wind, smart grid, energy management, biofuels and others, should be thinking about integrating public affairs and PR together to secure government funding and VC dollars.
Will the stimulus ultimately bring back the cleantech VC market? Time will tell, but having the government as a customer and/or financial backer could be the thing that gets cleantech and green companies through the economic downturn.
As Scott Kirsner says, everyone from top VCs to Secretary of Energy/Environment Ian Bowles to the CEOs of 1366 Technologies, Ze-Gen, Mascoma, Oasys Water, and GreatPoint Energy will be in attendance. Check out both Renewablog and the live show feed on the GoingGreen site for real-time updates.
Regardless of how the government balances speed and accountability, there are three undeniable points about the stimulus:
-The amount going into green and cleantech is enormous
-The quicker those funds are invested, the better it will be for job creation
-The money needs to be invested transparently and not just go to the same government contractors and companies that have milked Uncle Sam for the past three decades
To say that the stimulus package currently under review contains significant support for renewable energy, green and cleantech would be a gross understatement. Depending on whose data you use, it is roughly five-to-seven times the total of all VC investment in cleantech in 2008. Or, a little more than twice the total revenue of the solar industry. Wow.
Biofuels will get $800 million. Batteries will get a big chunk. Bottom line: Even if this bill is halved before being signed by President, it will create the largest government investment in renewable energy, likely exceeding all past investments combined.
Government subsidies have been critical to the growth of solar and wind in Europe. The US has lagged behind. This is a major step forward in making the US the world's top producer of renewable energy.
Companies need to take advantage of this opportunity because it will not exist again in our lifetime. It is analagous to being a contractor or steel producer during the New Deal Era. Opportunities exist for both commercially mature and pre-commercial technologies.
Many companies avoid engaging in Government Relations because they don't understand it or they rely on industry associations to execute it on their behalf. If you have a technology that you believe can solve the energy, environmental and geopolitical challenges facing the country, now or in the future, then you should learn about how it works. You will learn a lot about policy making, appropriations, government project management and how to sell to government entities. It also will add to your executive's expert credibility when your public relations team is executing a thought-leadership campaign.
Uncle Sam's House is about to become much more energy efficient and whether you directly engage with him or not, there are many companies that will play a role in helping.
As we enter 2009, we wanted to take a look at cleantech markets we think will get the lionshare of the media attention during the year. We're calling it the Clean (Baker's) Dozen. We made our selections based on a variety of factors including 2008 venture funding, 2008 media attention, ties to existing large industries (auto, construction) and viability for commercialization.
Here is the list:
-Thin-film solar
-Inverters
-Solar thermal
-Wind
-Cellulosic Ethanol
-Algae
-Geothermal
-Monitoring & Management
-Concentrators
-Storage & Batteries
-Carbon Offsets
-Green Building Materials
-Green Transportation
There are others that should be on this list and that have significant public relations and government relations potential, including Water conservation, purification and potability, but they just haven't taken off yet. We'll do a post on each of these during Q1 and highlight some approaches we think are worth watching. Through our government relations team, we'll also keep an eye on Federal and State funding and policy to see if the G-men agree with our choices.
For weeks now we've been hearing doom and gloom about the health of cleantech investing amid the financial services meltdown and how cheap oil and VC turtling would cripple renewable energy. Well yesterday, SunRun, a residential power-purchase agreement (PPA) provider and in full disclosure, a Schwartz client, received $105 million in backing from a banking institution (of all places).
And it is not just SunRun. EnerG2 (ultracapacitor), ReGen (waste heat to power convertors) and Qteros (biofuels) raised close to $40 million combined in the past week. It's clear that as President-Elect Obama talks more and more about cleantech being a priority, investors continue to bet on renewable energy and green as a good investment for their dollars. For those companies not getting venture or bank backing, the government is a good option B.
One other quick note about the federal climate for renewables: With the news that John Dingle (D-Mich) has been replaced by Henry Waxman (D-Calif) as Chairman of the Energy and Commerce Committee, it is expected that we will see aggressive legislation and appointments related to climate change. Waxman is seen as being much friendlier to solar, wind, higher fuel economy and other environmental policy than was Dingle during his tenure as chairman. This is sure to get the cleantech industry's PR and GR machines trying to drive green legislation in the first 100 days of the next Congress. It should be an interesting first four months of 2009.
In a NY Times Op Ed on Sunday, former Vice President Al Gore outlined a five-step plan for the US to get 100 percent of its electricity from renewable resources. Some interesting points in the piece:
1) He calls for the government to support Detroit (and start-ups like Tesla) in building plug-in hybrids that can feed off of the renewable energy grid he describes.
2) He discounts the validity or at least the current state of "clean coal" technology. Is he right? Who knows? If they are going to try and make clean coal a reality, they need strict regulation around mine safety and ecologically friendly means of mining it.
3) He alludes to a cap-and-trade system for carbon and discusses greater US involvement in being an international leader in carbon regulation. It will be interesting to see if Obama and the Congress tackle carbon legislation in 2009.
It seems in addition to the ambitious plan for government involvement, Gore thinks that Web 2.0 could have a role in green policy movement.
Gore's opinion piece will stimulate a lot of debate and continue the pressure on the incoming Obama administration and Congress to push renewable energy regulation and investment to recharge the economy. It will also drive lots of discussion from green blogs this week.
Some random thoughts heading into the most critical five weeks in the history of wind, biofuels and solar, and by extension, the green PPR sector.
-The Senate picked the wrong week to pass an ITC extentsion, as the federal government spends its time focusing on the financial crisis. Hopefully the financial bailout package will be finalized by Sunday and the House will not try to ramrod its own version of the ITC bill through. It will go a long way in determining what kind of mood companies are in at Solar Power International 2008.
-Last night in the Presidential debate you heard Obama waiver on how much of his energy plan he can push through with a huge financial bailout figuring into the budget for 2009 and beyond. This only heightens the importance of renewing the ITCs before the end of the year.
-I know that many see the energy bill as just that...energy policy. However, consider the economic impact that the ITC extension will have on growth of the renewable energy industry, helping create green collar jobs across the country. This includes engineering, IT and office jobs at the cleantech companies themselves, as well as jobs in solar and wind installation and plant construction, and factory workers at new US-based plants for the production of biofuels. Contractors, construction workers, electricians and other skilled workers will be put back to work after watching the new homes market dry up. Bottom line: The ITC extension is as much of a jobs bill as it is an energy bill.
So there are environmental, economic and geopolitical reasons to get something done before the end of the year. Let's hope it happens.
Some random thoughts on which I may expand later after digesting the week at GoingGreen:
-There is a debate between two camps in solar and other incentive-boosted renewables. One camp says there needs to be a focus on markets with resources (abundant sunlight) and less emphasis on public policy. The other camp thinks that policy is the major issue short and long term. I think they are both right in that eventually the technology will be so efficient and cost-effective that it will end the ROI debate, but incentives will still help the market and can't be ignored (hello, Germany).
-Most experts agree that the country cannot afford to ignore nuclear in the short term. That said, many believe that new nuclear wouldn't have an impact for a decade or more (kind of like new oil fields) and so the emphasis should not be on nuclear as the primary solution. Most support keeping it at 20% of our energy source. Elise Zoli of Goodwin Proctor had some of the best points on the subject on the GoingGreen fossil-fuels panel. One point on nuclear by Vinod Khosla that was interesting: The innovation cycle for nuclear is 15 years whereas solar thermal and other technologies will have gone through 15 innovation cycles in that same time period.
-Green and cleantech are the fastest-growing venture asset classes, attracting between 10-14 percent of all venture dollars. It is now the "third leg on the VC stool" with technology and life sciences. -Ira Ehrenpreis, General Partner, Technology Partners
-The most depressing panel of the event was the clean-coal panel. Not depressing in the sense that they made bad points or failed to make a case, but it just seem like the participants anticipated objections and weren't passionate about the subject. One interesting point was made by Oorla Protonics about using natural gas to turn materials into oil. The CEO said that natural gas is the champagne of fossil fuels with oil being the wine and coal the beer. Using champagne to turn materials into low-grade wine or beer is ludicrous.
-Not surprisingly Khosla was the hit of Tuesday and Elon Musk (Tesla, SpaceX) the draw on Wednesday. Khosla talked about how it is "main tech" not "cleantech" that matters and that the market should embrace solutions that can capture 80 percent of the market. He said that using one sheet of toilet paper as suggested by Sheryl Crow is not a solution and that the Prius is a nice status symbol but so are Gucci bags. This is probably the area where I disagree with Khosla most. I know he is looking at it more through an investment lens, but from a practical standpoint EVERY little bit helps. So if what I can afford to do today is buy a Prius and use less goods that leave a footprint, then I should do it. It is analagous to weight loss. If someone focuses on the sixty pounds they need to lose, instead of making small changes to their habits (less sugar, don't eat at night) that result in gradual weight loss, then they will never succeed. I am not saying that we should settle, but there has to be bridges to that 80 percent market solution.
-The most daunting thing from a green and cleantech PR perspective was this: There is SO much noise in the market and we still haven't really seen anything yet. Imagine for a moment that the current financial crisis dies down in Q4, the federal climate becomes green friendly and boosts incentives, the states and municipalities continue their charge. What will that do? Increase funding in cleantech to astronomical levels, likely open the public markets to green IPOs and pour millions upon millions into the marketing and government relations coffers of cleantech and green companies. Most are operating on marketing budgets under $1 million annually today, investing primarily in manufacturing, R&D and go-to-market. Any money they are spending now (and it is not much) is on public relations, search-engine marketing and some local government relations. The second half of 2009? We may see double the number of public companies and marketing budgets in the millions. Advertising will get better and more frequent, and the PR and lobbying noise will get louder. There may be a HUGE government cookie that begins to open in six months.
GoingGreen was a fantastic event held at a great venue. It was yet another cleantech event that was oversubscribed showing the health of the industry. It has made me even more excited for Solar Power International in San Diego. Feel free to get in touch with me if you will be there the week of October 13. jmorris@schwartz-pr.com
After a long hiatus in which I took a couple of trips and battled a sinus infection, it's great to be back in the saddle on Renewablog. Not to mention I returned with exciting news.
Schwartz has partnered with AlwaysOn to sponsor and represent the GoingGreen event. GoingGreen has become the premiere cleantech industry event focused on green financing, venture capital and emerging growth companies in solar, wind, green IT, sustainability, biofuels, etc.
GoingGreen kicks off what will be an action-packed Fall for the renewables market, as PVSEC Europe, GoingGreen, greenXchange Xpo and Solar Power International (the artist formerly known as Solar Power 2008), all take place between Labor and Columbus Day week. If the other conferences have a line-up like GoingGreen (Raj Atluru and Steve Jurvetson, Vinod Khosla, Ajit Nazre, Ray Lane, etc.), we are in for one great stretch of conferences. One topic that is sure to be top of mind? The expiring renewable tax credits and the impact that a change in Washington will have on industries like solar, biofuels, wind and hydro.
If you attend the events, let us know what you think. I've been waiting for this stretch all year long.
When posting on a blog it is sometimes easy to overthink your topic and gloss over some of the really simple topics that are incredibly critical. This dawned on me when reading a post by John Gartner at MarketingShift.
This is a critically important point for a couple of reasons:
1) We have reach the second stage in green hype. The first stage was the embracing of Green by hype watchers as the next big thing in business and lifestyle. The second is an age of backlash and skepticism driven by fear that it willbe adopted, along with generalpushback by media and others who will say that adoption is not nearly matching the Stage-One hype. A lot of the media out there right now is focused on the inefficiency of solar, the negative impact of biofuels and freak windfarm fires. This makes it a prime period of time for green washers to get destroyed by media and the general public. Hence, why John's "genuine" statement is important.
2) People sometimes overlook that communications and marketing can come across as condescening. Look at the presidential campaign. You have the campaigns of Hillary Clinton, John McCain and Barrack Obama trying to spin every little piece of information or data their way, to the point that it sometimes gets insulting to the viewer. An Editorial in the NY Times this week accused them of thinking the American people are a bunch of "rubes."
This is how I feel sometimes about green marketing--that is so superficial and transparent, it does more harm than good. So the simple message is: Be genuine and don't condescend. If you have to fool someone or oversell your greenness, it won't appear green to your audience, it will be transparent.
-Word is that geothermal is getting investor attention and beginning to take off. This is very interesting because the government is also boosting its investment in geothermal in the FY 2009 budget. Others getting a boost? Solar PV, Wind and Biomass. The news is not quite as good for tidal energy.
Finally, a cool round-up of money-saving, green gadgets on CNET.
So I am going to have to report back on how WIREC day two went in a future post as our meetings today took us to locations off site, but still some interesting tidbits I didn't get to yesterday:
-One business development executive at a solar concentrator company said that he got in "very early" on sponsoring and exhibiting at WIREC, giving him a large booth size and prime location alongside the big boys (BP, Chevron, etc). If you are a green marketer with a gambler's mentality, there is definite risk and reward to taking this approach. He saw enormous reward as they were front and center to anyone entering the expo. A solid relationship with ACORE also helps.
-On which shows should you gamble if any? The best shows are obviously ones in which there are other local key audiences that can be leveraged in case the event is a bust. If you can schedule some local meetings/drop-bys off site, you can still end up with qualified prospects from the travel associated with an event. DC is a great location since there are a lot of companies with headquarters in the area, as well as a media and government-rich audience with whom you can network. The San Francisco Bay Area, Boston and New York are also good locations. Anything beyond those markets can be tough depending on your vertical focus.
-From a speaking perspective, it can be tough to justify the time and expense to present at an unproven event. Nothing is worse than having your executive speaking to a room of six unqualified attendees who don't ask questions. Therefore, while taking a chance on exhibiting costs can be prohibitive, so is the credit capital cost of sending your executive to an unknown conference.
-I met with an investment company (hybrid of an investment fund and a venture firm) that actually sees the renewable energy world very similarly to the way that green marketers and marketing/PR firms see the industry. Solar and wind are the most mature, with biofuels, hydro power and others a bit further off. That is not to say that companies in those markets cannot benefit from government relations, public affairs and PR, but those campaigns would be built around early mindshare, driving investment and and educating the market. Solar and wind tend to be the companies in a position to commpete on a product basis.
-WIREC was not very well attended from a media standpoint, but there was a young analyst firm exhibiting, Emerging Energy Research. It is interesting to see some of the boutique firms beginning to pop up offering advisory services to vendors of renewables and consulting services to commercial and government organizations. Who will be the Green Gartner?
-The most interesting item to come out of the WIREC show? How much government money there is that can be invested in renewable companies, but how few companies understand how to tap it. Government relations seems to be the great untapped market opportunity for a lot of renewable companies. It is money that requires no diluting of equity, no forfeiting of intellectual property rights and no decision as to whom you sell the product. If I were a VC concerned about becoming over invested in one of my portfolio clients, this would seem a like a great option since my equity stake and value would only be positively impacted by bringing on the government as an investor. With $152 million going into solar and $53 million (approximately) going into wind, GR seems like a great place to get a significant ROI.
Here endeth my WIREC visit. Off to Dulles to complain about the lack of midday direct options to the West Coast.
Tuesday marked the first day of WIREC and it was an interesting start. Some observations:
-Kudos to the WIREC folks for doing a much better job than some other conferences at having an efficient registration system. At Solar Power 2007 in Long Beach, a colleague and I stood in line for more than 90 minutes for badge pick up (we pre-registered) and ended up missing a meeting as a result. WIREC knew the event would be well attended and they prepared accordingly. It took about four minutes to get our badge.
-While photovoltaic (PV) solar was the rage at Solar Power 2007, solar concentrators seem to be the most prevelant technology at WIREC. Sopogy, SkyFuel and Abengoa were a few of the concentrator companies exhibiting, albeit with slightly different strategies and target markets. Global Solar Energy was one of the major PV manufacturers present (*disclosure: GSE is a Schwartz client).
-Wind and solar are again the most dominant technologies on display in terms of commercially available products. Also well represented are biofuels, biomass and firms looking to service those companies (legal firms, government relations, etc.).
-Big kudos to ACORE for sponsoring a free lunch and again to the WIREC folks for having enough seating.
It'll be interesting to see if the traffic picks up a bit more tomorrow and to see what companies are saying regarding the ROI of exhibiting. There are obviously a lot of these events popping up around the country and abroad, and finite green marketing budgets need to know which events are worth the growing costs.
It's been a very busy week as I prep for a trip to WIREC in Washington D.C. The Washington International Renewable Energy Conference is a gathering of renewable and cleantech companies of all types. It just so happens that WIREC is taking place just as the wind lobby gets together in Washington for a major push.
WIREC also coincides with the House's passing of renewable energy legislation that would increase oil company taxes and extend renewable energy credits (via Earth2Tech). Not everyone is convinced that the legislation will get signed.
Everyone has seen solar and wind really take off over the past two years. What's next? Well, if you follow the money it could be biofuels. Mascoma got $50 million in funding. It will be interesting to see if 2008 is the year new fuels really start coming to market ... maybe 2009 will be the year we see the changes in infrastructure to support those fuels. In any event, the market is about to get noisy for you biofuels marketers.
But let's be honest ... the markets of all renewables will explode in the next year as we have the perfect storm of increasing demand, huge rounds of financing and an anticipated change in the political climate for renewables.
I'll be sure to report some of the interestings things I see and learn at WIREC. For those attending the event, safe travels.
You may seen the news this week that Schwartz has officially announced a Renewable Energy and Green Practice. Some folks will be shocked that this is something that we are just announcing since we---like some other firms---have been talking about it and executing on it for more than a year.
We were tempted to put our stake in the ground in early 2007, announcing to the world that we were making a concerted effort to build out the practice and that we were ready to help cleantech companies achieve their PR goals. We were even more tempted as we executed Green campaigns for clients like Rackable Systems, McNamee Lawrence, Shawmut Design and Construction, and CheckFree. It was tough to resist making noise when we began working on pro-bono projects, like the San Francisco Waldorf School and the Business Council on Climate Change (BC3), and commercial projects, such as AgileWaves.
So why did we wait? Well, clients always ask us when they should announce a new product or service offering. Our response is usually, "If PR is the only driver of the announcement date, we should wait until you have a compelling story around the product or service, including customers that support the fact that what you are bringing to market is truly differentiated."
The news is not that we are entering the Green PR world. It is that we have a differentiated services offering, including aggressive media and government relations, that is already helping our cleantech clients achieve their business goals. The news is that we are taking what is our single biggest core competency--helping emerging growth companies facing heavily entrenched, better-funded competition level the playing field through PR--and applying it to a market that needs it more than perhaps any other technology market in history.
Renewable energy companies face significant challenges, many of which I have blogged about the past. They face one of the largest and most entrenched industries in the world in the form of traditional energy (oil, gas, coal, etc), as well as the marketing and lobbying arms of numerous industries that don't like being regulated (auto, utility, manufacturing).
They also face very steep, well-funded competition within their own markets now that VCs around the world are sinking eight and nine-figure rounds into companies in solar, wind, fuel cells and biofuels. They also face large corporations in other markets who have begun developing and acquiring their way into renewable energy.
Bottom line: This is the ultimate David versus Goliath story and a story in which we are relishing the opportunity to play a part. We now have officially been cast in a role and are packing a pretty big slingshot.
The practice of Greenwashing has made lots of news lately, as some companies overstate their commitment to green practices and the FTC threatens to investigate. I'd like to think it's a case of marketers not being fed accurate information versus marketing and PR intentionally trying to mislead the public, but until some internal memos make their way public, we'll likely never know.
I've been seeing a lot of General Motors ads recently pushing that company's commitment to green technologies, from greater fuel economy to hybrids, from biofuels to electric. Most will say that history should dictate a great deal of skepticism with regards to how committed GM actually is to greening their product line, pointing to the short-lived infatuation with compact cars among U.S. automakers in the late 1970s and early 1980s.
That said, the economic, ecological, geopolitical and social benefits of going green have never been better publicized, and I think the growth of Toyota and Honda have slapped U.S. automakers with a dose of harsh reality.
I am cautiously optimistic that what GM's CEO says in this CNET interview is true and that American auto manufacturers are committed to creating products that deliver the aforementioned benefits. Let's hope this is not a case of the largest U.S. auto company greenwashing the public in hopes that the market will again eventually favor the gas-guzzling behemoths that dominated the market over the past decade. Unfortunately, some suspect this is the case and will likely not believe Detroit can be green until they drive the proof.
Greenwashing is a foolish practice if done intentionally. It is analogous to a company claiming to have great data security only to find out later that the company was lax and suffered a breach. The PR damage of being accused and/or found of greenwashing is much worse than the likely benefits of making false claims about practices. It betrays the number one rule of marketing and PR: tell the truth.
Unfortunately, there are hundreds of companies out there likely partaking in greenwashing, meaning we will likely see more of it in 2008 than ever before.
Germany is #1 in solar. The U.K. intends to be #1 in wind. Brazil has long been #1 in ethanol. The U.S.? Does being first in failed attempts to adopt a national renewable energy strategy count?
The recent passing of the energy bill by Congress and subsequent signing by the White House put an exclamation point on what has been a stalled effort to get aggressive renewable energy initiatives adopted at a national level. Stalling by utilities and some energy giants also hasn't helped.
In the meantime, different geographic regions and emerging-growth companies have really led the charge in terms of developing their own programs and investing in various approaches.
While I don't excuse the federal government for failing to advance renewable energy research, adoption and strategies, it may not be a bad thing that states have taken the lead. After all, we are talking about the country with the fourth largest land area in the world. A country so vast that it doesn't make sense to say "we are going to be first in X, because it is the best option for the entire country."
Truth is, the only thing that the U.S. should eventually become first in is consumption of renewable energy. It should serve as a melting pot of renewable energy, as it has served as a melting pot of cultures for hundreds of years.
This weekend, my wife and I were getting ready to watch a movie when I saw The American President on TNT or TBS (is there a difference?). This is the one where Michael Douglas plays a widower, single father and a first-term president. He meets and begins dating a lobbyist (played by Annette Bening) from a environmental group. The climax of the movie is a press conference where Douglas says that he is going to send aggressive gun control and climate legislation to Congress--two separate pieces of legislation that he was using as bargaining chips--while ignoring any negotiating he has already done with House and Senate members on the bills. The global warming bill he supports is a 20% reduction of green house gases by a certain date.
Now, I've seen the movie a dozen times (sadly) and it remains one of those guilty pleasure, Saturday afternoon movies that I will likely watch again (it has Michael J Fox, Richard Dreyfus and Martin Sheen as well...great cast). However, something struck me this time when watching it.
I knew that the environmental legislation pushed by Bening's character was a central plot component, but what struck me was that this was a topic for a movie released in 1995. That is 12 years ago now, going on 13. This amazed me because I would never have guessed that climate change has been a mainstream topic for that long. Maybe it is because I thought the debate was still centered on the ozone layer then or because gas was under $2 per gallon. In any case, I was shocked. Yet, it still seems as though we are only now scratching the surface of coming legislation, technology, etc.
What it also made me realize is that David Roberts of Gristmill is right: the world will be a much different place in 2020 when we are nearing the first date in many carbon emission-related bills currently under discussion.
Consider that in 1995Bill Clinton was a first-term president. Solar was a niche industry with little VC or private equity investment and certainly no $200 million rounds. The Dow hit 5,000 for the first time. Yahoo! was founded. Biofuels, fuel cells and ethanol weren't part of the everyday lexicon. CFL stood for Canadian Football League, not a type of light bulb. There was no Internet bubble or tech recession.
Amazing, no? Given the amount of investment in and marketing noise around renewable energy today, I am willing to bet that things will advance a bit more quickly over the next 13 years, with or without Michael Douglas leading the charge.
