First, Nurture Clean Energy Firms...
December 2006 / January 2007
Volume 4 Number 6
Capital investments in clean energy companies, such as those developing solar, wind and hydrogen technologies, are on the rise. And an organization known as the Clean Energy Alliance (CEA) is helping startups meet the demand.
Formerly known as the National Alliance of Clean Energy Business Incubators, the 501(c)(3) nonprofit is an association of incubators and businesses that specifically nurture clean energy companies. Members help startups hone their technologies, up their business savvy and attract investors.
"There are a lot of great clean energy technologies coming out of the national laboratories, but not a lot of great businesses or products," says Marty Murphy, alliance founder and manager of enterprise development programs and forum chair at the National Renewable Energy Laboratory.
The alliance was founded five years ago, as an NREL initiative. Murphy says attracting investment in clean energy companies was challenging in the beginning. The dotcom bubble burst made investors weary and there were no industry-specific incubators in the U.S. The organization first partnered with the Austin Technology Incubator at the University of Texas to launch the first-of-its-kind Clean Energy Incubator (CEI). The Texas State Energy Conservation Office provided initial funding for CEI. "They all agreed they'd like to see the clean energy market emerge," says Murphy.
Building on the success of CEI, the model was taken to a few states and eventually nationwide. Murphy says he sought out incubators committed to the long haul and those interested in community development. Technologies and companies generally come out of the national laboratories and universities.
"Good incubators refuse more companies than they accept," he says.
In fact, the alliance is the first association of incubators committed to a specific technology base. The group now boasts 11 incubators nationally.
To date, the incubators have graduated 69 companies, assisted in commercializing 102 technologies, spurred the creation of 2,378 jobs and helped attract $173 million in capital, the alliance says. There are currently 104 clean energy companies in member incubators.
Murphy says members have an interest in clean energy, are good incubators in their own right, have well-established relationships to help companies grow and are self-sustainable.
And investment trends support the need for such an initiative. Venture capital investments in alternative energy and conservation grew from $24.86 million in 2001 to $166.29 million in 2005, according to the PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report.
Venture investments in 2006 total $625.81 million, as of the third quarter.
"Being a member of the alliance has enabled us to have a very specific focus on clean energy and energy efficient companies and technologies," says Suzanne Roberts, project director at Technology Ventures Corporation in Albuquerque, which has been a member since 2002. "We've carved out a niche we hadn't had before."
The main benefit is networking, she says. Alliance members regularly refer investors and businesses to incubators that can best meet the need. Another benefit of being part of the alliance is being officially tied to a prestigious organization like NREL, according to Richard Amato, who worked with CEI and is past chair of the CEA.
Michael Hennessy, president of Balston Spa, N.Y.-based MTECH Laboratories has been on the receiving end of services. Founded in 2001, his company develops cryogenic power electronics. An Alliance member, Albany NanoTech, helped him refine his business plan, assess commercialization potential of the technology, fabricate products and attract investment. MTECH recently landed upwards of $4 million from state and federal entities.
"Most important, Albany NanoTech opened up contacts for us in the energy industry," says Hennessy.
In fact, many clean energy startups fail for several reasons:
—€ There is not a level playing field
—€ They don't know the investment game
—€ They are technology- versus market-focused
—€ Infrastructure for clean energy is still in its infancy
—€ Big energy companies are not yet fully engaged
—€ There is a lack of product maturation and market validation
"The intent is to take the Alliance to the next level, making it the leading provider of support services to clean energy incubators, technology development entrepreneurs and startup companies," says Pradeep Haldar, incoming CEA chair and professor at the college of nanoscale science and eEngineering at the State University of New York at Albany.
The organization is focusing on providing enterprise development assistance for startups, networking and collaboration opportunities among members, education and outreach, expertise to spur technology and product maturation and expertise related to research and development strategies.
Goals include bringing 10 more incubators on board; offering varying levels of membership to venture firms, angel investors, non-profits, government organizations, successful entrepreneurs, banks and insurance companies, among others; seeking out sponsors; establishing a strong presence on the internet; pursuing tax-exempt contributions from public and private foundations; and securing grants from federal agencies.
"We want to make sure the organization grows rather than having it be dependent on the ups and downs of the energy industry or initial members," says Haldar.
Marty Murphy says the time is right to grow the Alliance. "I think people have underestimated the ability of incubators to have a huge impact on getting new technologies into business and the marketplace" he says.
Eric Billingsley is a freelance writer based in Albuquerque.
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Clean Energy Business Incubators
Advanced Technology Development Center
Atlanta
404.894.7700
www.atdc.org
Albany Nanotech
Troy-Albany, N. Y.
518.437.8686
www.albanynanotech.org
BizTech
Huntsville, Ala.
256.704.6000
www.biztech.org
Boston Technology Venture Center
Boston
617.266.1600
Business Innovation Center
Mobile, Ala.
251.660.7002
www.ceebic.org
Florida/NASA Business Incubation Center
Titusville, Fla.
321.267.5601
www.trda.org/fnbic
National Environmental Technology Incubator
Wilburforce, Ohio
937.376.6011
www.centralstate.edu/netincubator
Rensselaer Incubator Program
Troy-Albany, N. Y.
518.276.6658
www.rpi.edu/dept/incubator/
homepage
Technology Ventures Corporation
Albuquerque
505.843.4091
www.techventures.org
National Renewable Energy Laboratory
Golden, Colo.
303.275.3050
www.nrel.gov
Clean Energy Incubator
512.305.0050
www.cleanenergyincubator.com
Environmental Business Cluster
San Jose, Calif.
408.938.3920
www.environmentalcluster.org
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