NREL Bridging the Gap for Entrepreneurs and VCs
September 22, 2010
PowerPoint? Check. Business plan? Check. Elevator speech? Check.
Breath mints, aspirin and antacids? Triple check.
Preparations are nearly complete for the 23rd Industry Growth Forum held in Denver beginning Oct. 19th by the U.S. Department of Energy's National Renewable Energy Laboratory.
Entrepreneurs at the Growth Forum take the stage under hot lights to make their best pitches to panels of discerning judges — venture capitalists (VCs), public officials and fund managers — who have seen and heard it all before, often in more promising economic times. All the while, a digital clock reminds them that time is running out.
It sounds a lot like the cleantech version of "America's Got Talent," without the sequins and singing. Expect the judging to be just as tough.
"In this economy, the judges will be looking for more innovation, a game-changing technology," said Lawrence "Marty" Murphy, Forum chairman and NREL's manager of Enterprise Development.
"There isn't as much capital available now as in years past, so when VCs make an investment they want to make a bigger investment that could result in large returns," Murphy said.
Premier Event for Clean Energy Start-Ups
NREL's Industry Growth Forum has grown into the largest national venture event focused exclusively on companies developing clean energy products to serve the electricity, buildings, and transportation infrastructures.
The Forum is the premier event for innovative clean energy start-up companies to meet venture capitalists, corporate investors and strategic partners.
This year, 200 clean energy entrepreneurs applied. Their products and plans were scored by 135 investors and other experts, and 34 were selected to compete as presenting companies. Since 2003, presenting companies have collectively attracted $3.4 billion in capital.
Among the 34 finalists, this year's emphasis is energy efficiency, energy management software, thermoelectric, Smart Grid and building technologies. In contrast to previous years, there will be relatively fewer presentations on solar, wind and biofuels.
"A few years ago people were seeing a lot of deals on photovoltaic (PV) technologies," Murphy said. "So if you have a PV company at the Forum this year, you'd better have a pretty innovative idea."
Emerging companies will get 10 minutes apiece to make their case.
Then comes the hard part — answering the judges' questions and absorbing their critiques. The winners will be announced at the concluding luncheon on October 21.
The top prize is the $25,000 Best Venture Award, which includes $10,000 in cash and NREL in-kind services valued at $15,000. Last year's Best Venture was Ecovative Design, which grows and forms biodegradable packing materials.
Two Outstanding Presentation awards, each valued at $15,000 in cash and in-kind services, also will be announced.
The prizes are sponsored by Wilson Sonsini Goodrich & Rosati.
A new opportunity in this year's schedule is a One-on-One Partnering and Pitch Session on October 19, the first day of the forum.
The session provides scheduled, facilitated meetings between investors and entrepreneurs, as well as potential partners and government officials. The One-on-Ones are open to all registered Forum attendees. Innovators and companies that applied to compete as presenting companies receive initial consideration for slots on the investors' schedules.
Investors range from small venture capital firms to large corporations such as Honda and Chevron.
"The big companies are looking to invest in a late-stage project as a strategic partner," Murphy explained.
The forum is part of NREL's broader strategic efforts to accelerate the commercialization of clean energy innovations and assist entrepreneurs in their search for investment capital and other resources.
Each year the applicants provide the Laboratory with an indication of early cleantech trends which helps officials gauge how they can better serve the entrepreneurial sector and foster new companies based on NREL technology.
"We want to grow clean energy talent based on the most innovative ideas and the best business plans," said NREL Robert Writz, an NREL commercialization project manager who is coordinating events at the Forum. "By the end of the event, we will see strategic partnerships and investments emerging."
A Crash Course for Entrepreneurs
NREL launched the Forum in 1995 as a way to facilitate discussion about new technologies by venture capitalists, public officials and clean energy entrepreneurs face-to-face.
Many early-stage clean energy firms were failing because they were unable to make the leap from public sector financing to private sector funding. Young companies needed assistance developing a business pitch and to be schooled in the expectations, requirements, and processes for raising private sector capital, Murphy said.
- Presenting companies have cumulatively raised a total of $3.4 billion
- Within a year of presenting, companies have raised $635 million
- Within two years, companies have raised $1.12 billion.
- 53.2% of the presenting companies (91 of 171) have received capital investments
- 25 strategic partnerships have been formed
- At least five Forum companies successfully completed an IPO, merger or acquisition.
Similarly, the clean energy investment sector needed realistic information about the emerging technologies, time-to-market, and the associated risk profile.
Instead of following the trend of five minute tête-à-têtes popularized during the dotcom financing boom of the 1990s, Murphy said the Forum deliberately tried to be more about relationship-building and capacity growth.
"There was an information gap between the entrepreneurs and the investors that was a 'valley of death' for new products and companies," Murphy said. "A lot of good technologies were not getting commercialized. The Forum bridged that gap and it continues to do so."
Even if entrepreneurs are not selected to present at the forum, Murphy says applying to the event and attending the sessions can be a crash course in entrepreneurship and provide extensive networking and partnership opportunities.
The Application Process — For many entrepreneurs it's the first time they have articulated their goals, business model and elevator pitch to someone other than family and friends. "When they see the remarks of the reviewers, it's a wake-up call," Murphy said.
Preparing for the Forum — Each presenters is mentored by an expert to refine the presentation, business case and elevator pitch with an eye towards attracting investment.
The Forum Pitch — The entrepreneurs learn in a few minutes whether judges think they did their due diligence in anticipating what judges — and investors — need to know. "There's no substitute for this real-time feedback," Murphy says. "This format allows the clean energy community to clearly hear the concerns and interests of the investment community."
— Joe Verrengia