Venture investment firm Technology Partners on Tuesday announced it has raised a $300 million fund to invest in clean-technology and life science companies.
Heading up the clean-tech portion of that fund is Ira Ehrenpreis, who has been investing in the sector for several years. Among his investments is high-end electric-vehicle producer Tesla Motors, biofuels company Imperium Renewables and water treatment firm Sensicore. With so much investment going into the clean-tech area, I asked Ehrenpreis to provide a snapshot on clean-tech investing.
Q: With all the activity in clean-tech venture capital, are you concerned that there is too much money chasing too few good deals?
Ehrenpreis: We're still at the beginning of this clean-tech revolution. We have a convergence of factors driving the macro opportunity. We have an unprecedented political environment. We were very much a country that was divided between red states and blue states on issues of energy and environment. (We've gone) to a country that is unified in its focus on green, where presidential candidates are competing against each other to see who can be the greenest.
What are some of the things you like the most these days?
Ehrenpreis: I think that in many ways, our thesis is that clean tech is not a monolithic term, not a monolithic sector, but rather a breadth and diversity of sectors and subsectors therein, and our portfolio is really a reflection of that. We have companies in the area of coal technology, electric vehicles, biofuels, battery technologies, fuel cell technologies, water technologies, advanced-material technologies. So in many ways, we think the opportunity is about this sheer breadth and depth of opportunities.
Is there a sufficient customer base for these technologies? Energy industries are huge markets, but you don't typically think of utilities or fuel companies as aggressive adopters of technology. Are they willing to spend?
Ehrenpreis: We have an unprecedented corporate ecosystem today, where we have companies like General Electric and its Ecomagination program, BP calling itself "beyond petroleum," and Google and many of the largest investment banks, with their huge sustainability efforts, really creating an ecosystem that represents a great opportunity for start-ups we're investing in.
We have an unprecedented public interest in the sector catalyzed in large part by Al Gore and An Inconvenient Truth . We now have an environment where we can't pick up a newspaper or magazine, or watch TV without energy and the environment being at the forefront.
We have an unprecedented entrepreneurial environment where we have some of the best and most experienced entrepreneurs and executive teams migrating to the clean-tech magnet. It's the next wave of opportunity that they want to be part of. So there's this convergence of factors that is driving this incredible opportunity that we think is just at the beginning.
There already is climate protection legislation, and people expect that there will be more in the United States. What sort of effect on entrepreneurs and business plans is that having on clean-tech investments?
Ehrenpreis: You know there are so many opportunities in clean tech that I think it's a mistake to look at one piece of legislation or even just one facet of the opportunity that's inherently driving this opportunity. Instead, we have so many different sectors presenting great opportunities, many of which are focused on carbon issues, many of which are not. A lot of these companies in the clean-tech sector are companies that you would characterize, (like) any venture capital opportunity, as smaller, cheaper, faster types of deals.
I read a recent column of yours in which you said that there are good exits starting to occur in clean tech. What's your sense for 2007?
Ehrenpreis: We are starting to see successes in the clean-tech sector in the area of solar and ethanol companies. In 2007, there were IPOs (initial public offerings) in the demand response area, and we're going to continue to see the exit environment reflect new areas that reflect the diversity and breath of the clean-tech area.
You're on the board of Tesla Motors, which makes what sounds like a great
car. But when do you think electric vehicles will have mass market appeal?
Ehrenpreis: Tesla, in so many ways, represents what we think of when we think of clean tech. We think of the environment and the financial value proposition going hand in hand and not being about compromising one or the other. And Tesla, in many ways, reflects the notion of not having to compromise.
Historically, when we thought of electric vehicles, we thought that you would have to compromise on style when you bought a car that is more eco-friendly. And Tesla represents this notion that you can have both. You can have a car that is offering a zero emission vehicle, but for people who love to drive, you're breaking the compromise that previously existed between the desirability and responsibility.
I think that trend is really at the core of Tesla, at the core of electric vehicles and of the clean-tech trend in general. That is this notion of duality. Desirability--doing what people want to have, finding products that customers want to buy--and doing it in ways that are economic and environmentally friendly, and represent a compelling financial proposition.