John R. "Grizz" Deal, left, chats with Stephen Sun Chaio, managing partner of Sycamore Ventures

Getting Closer to the Market

August / September 2006 By: Dean Takahashi Volume 4 Number 4

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Silicon Valley entrepreneurs and venture capitalists don't always look at the federal national research laboratories for bright ideas for startups. So the labs came to Silicon Valley to show off a little.

Representatives from three national labs staged a "Renewable Technology Expo" at the research think tank SRI International in Menlo Park, Calif., a stone's throw from Silicon Valley's biggest concentration of venture capitalists. The crowd of a hundred or so people listened to pitches about the best new "clean technologies" available for licensing from Lawrence Livermore National Laboratory, Lawrence Berkeley National Laboratory, and Los Alamos National Laboratory. The half-day event showcased a range of licensable "green" technologies, from water purification techniques to hydrogen fuel cells. Ken Freese, program manager at Los Alamos National Laboratory, said that he was pleased with the turnout and was considering making the event an annual affair.

"We're closer to the market than we have been in the past," said John Grizz Deal, a visiting entrepreneur and software evangelist at Los Alamos.

Leah Rogers, a business development executive at Lawrence Livermore, noted that environmental and energy efficiency research are just a sliver of the budget for the national labs such as Livermore, compared to national security research funding. But she noted that the environment is a national and global security issue.

The technologies that she described included an electrostatic ion pump, a high-energy density nanocapacitor, and electrodialysis using nanoporous membranes. Rogers detailed one Livermore project where scientists are purifying water with nanotechnology, or designer molecules. They created a granulated aerogel/activated carbon composite, a new kind of material that can bond with heavy metals, thus filtering them out from sewage. With the aerodynamic truck project, Livermore scientists calculated that 65 percent of a truck's engine power has to be used to overcome the wind drag while moving on a highway. By sloping the truck tops, the scientists create more fuel-efficient vehicles.

The presentations were part of an effort to improve ties with those who can commercialize the technologies in the labs through licensing deals, cooperative research and development agreements (CRADAs), or other government partnerships.
As Rogers described a "home scale" solar energy concentrator technology, she noted that entrepreneur Paul Fox of Foley Fox & Associates is working with the lab to develop a business plan. Fox, a strategic advisor to investors and executives, stood up in the audience and said that the solar industry needs to move into the more affordable mass market.

"We ran the economic numbers and liked it," he said, regarding licensing technology from Livermore. "The lab moved quickly."

Fox was just one of many representatives from venture capital, technology and other companies in the audience. He is an indicator that world events have turned the attention of investors to clean technologies that can save the environment and reduce the nation's dependency on fossil fuels that come from geopolitical hot spots.

One questioner asked if venture capitalists had enough patience to invest in research and development necessary to commercialize government technologies. But Rogers said that while it's true that big companies are more likely to make the investments, "many government technologies are ready to go." She noted that private equity hedge funds are becoming active in investing in companies, and angel investors also remain active at funding companies in their seed stages.
In terms of speed of licensing, Rogers said that it can happen in weeks or months. If it drags on longer than that, the reasons are often funding difficulties or uncertainties in the market.

Grizz Deal from Los Alamos took the stage to talk about Los Alamos technologies such as the EnergyFit system software to reduce power consumption in data centers, direct methanol fuel cells, and metabolomics research. Deal said that, although it sounded silly, Los Alamos researchers had come up with a way to trap carbon dioxide gases in underground pens to help reduce global warming. He said that while secrecy was a tradition at Los Alamos, the original site of the Manhattan Project, the lab was serious about exposing its teams and their talent to the commercial world.

"We have whole product strategies worked out and we're getting them about once a week," Deal said.

The available technologies included techniques for getting plants to grow faster, fuel cells, and techniques for improving the yield of solar cells by a factor of 10, Deal said.

Some discussion centered on the fact that the labs employ well-paid scientists and incur a lot of overhead costs. But Deal and other speakers present noted that those average costs per employee were about $240,000, not as sky high as some might expect. Since the labs have invested tens of millions of dollars in equipment and employ top researchers, the representatives said that licensing the inventions can be a bargain for would-be entrepreneurs who don't have to incur the research and development expense on their own.

Another questioner wondered if it would be hard to get security clearances for the would-be licensors, given the tougher scrutiny after 9/11. But Rogers and others said that most of the technologies were "outside the fence" in terms of requiring the clearances.

Pam Seidenman, technology transfer marketing manager for Lawrence Berkeley National Laboratory, detailed projects available at her lab. The projects range from nanotechnology research under way at the lab's new Molecular Foundry as well as energy efficient windows and lighting projects. Some scientists are trying to power a data center with direct current, reducing electricity costs by 20 percent.

Other LBL scientists are developing an advanced vertical axis wind turbine design, which is essentially a wind mill that can move regardless of the direction of the wind. She said estimates show that 3.8 million homes have enough suitable wind to support a windmill, and that the energy generated by a windmill can provide half of the energy that a home needs.

Still others have created an energy-efficient fume hood that can save 75 percent in energy savings over current fume hood systems. Seidenman also noted that LBL researchers created a high-performance, energy-efficient table lamp that has two lamps: one that points downward to light a desk and another that points upward for indirect lighting for the whole room.

Seidenman noted that one invention is a new kind of fuel cell that could be used in heavy trucks. She said that idling trucks can produce anywhere from 8 to 80 tons of pollution a year, and that 2 million new trucks are built each year. Using fuel cells in the trucks will cost $10,000 but could save $3,000 to $7,000 of fuel in a year.

"This kind of technology could pay for itself in two years," she said.

For more information, go to www.threelabs.com.

Dean Takahashi is a reporter for the San Jose Mercury News.