TERU Focus Report - California PIER Venture Forum
of VC and Public Investment in Clean Technologies
June 10, 2011 -- Michael Theroux
The California Energy
Commission's Public Interest Energy Research (PIER) program staged a Venture Forum on June 7, 2011, bringing together leading venture
capitalists (VC) and innovative energy companies in the clean energy sector. The intent of the Forum was to
encourage higher levels of venture investments and greater interaction (and understanding) between the VC world
and future PIER funded clean energy and fuels technologies. The Forum also spotlighted companies and projects
supported by PIER that are helping California meet its energy policy goals. CEC staff indicated that this is the
first of a series of Forums of this kind, each featuring different funding interests and clean tech companies.
The CEC will also hold three PIER program workshops to discuss and seek input on the program focus
and proposed initiatives.
The PIER program needs reauthorization and new funding allocations,
difficult in this tight economy. Assemblyman Das Williams, 35th Assembly District, Santa Barbara, opened the Forum
with an update on the positive progress of his re-authorization bill AB 1303, now on its way to the Senate. Assemblyman Williams noted that
the private capital community needs to clearly see that the state is supporting emerging technologies through
programs such as the PIER, but in return the state legislators must hear from their constituents that indeed
re-authorization is important, urging individuals to contact their representatives.
PIER Program Director Laurie
ten-Hope brought experienced entrepreneur and Angel investor Ron Hofmann to the podium to moderate the VC panel.
Mr. Hoffman specializes in business development and technology assessment in the energy sector. He introduced the
VC panel by explaining the context of "dilutive" and "non-dilutive" financing, the former including VCs, the latter
exemplified by PIER support. PEIR staff presented the VCs with a sampling of questions designed to explore two
major questions: (1) What are the current relationships and potential areas for improvement from agency to investor
to tech start-up? And (2) As PIER reauthorization is considered, what might the program do to fine-tune to meet
VCs, In order of
presentations: Dan Adler, Director of
the California Clean Energy Fund; Nat Goldhaber, Claremont Creek Ventures; Maurice Gunderson, CMEA Capital; Arati Prabhakar, US Venture Partners; and Jill Watts, Vulcan Capital (Google co-founder Paul Allen's investment
Highlights from the
· PIER was
designed to address early-stage funding for society-critical business sectors that the Marketplace was not ready to
support and to carry technology from demonstration to deployment, the first "Valley of Death" for
· A second
critical yet under-served funding need: taking companies from proven, small commercial stage to "scale-up", to meet
optimal market demand. This stage implies the need for a demand-driven incubation policy. Commercial-scale field
tests are critical for carry-on funding and market acceptance. RD&D may be the least expensive support, but it
does little for scale-up: use asset financing to support replicable modular distributed capacity.
· The Public
spends more annually on potato chips than on innovation and competitiveness; PIER is needed to drive state and
federal spending toward the practical application of research, to step from a "good idea" through a test bed to a
business and technical expertise tends to get new products to market faster: PIER may consider University examples
of Business Plan competitions. Yet the process of PIER (and the process of VC involvement) somehow needs to be
stream-lined: the US is being out-stripped by China mainly because we stumble over complex protocol. Agency staff
need Investment expertise: include VCs as advisors to PIER.
(1) Has anyone observed a policy
model that California can employ to cut through the quagmire of permitting and speed clean tech
· The BiDole
act of 1980 allowed universities to own intellectual property; this can provide a mechanism for public/private
investment and commercialization and is becoming more broadly recognized for Clean tech advancement. It could be
expanded to state/private.
· Teru Note: Manal Yamout's innovative pathway developed under Governor
Schwarzenegger effectively drove the Desert Renewable Energy Conservation Plan into place in record time. Ms
Yamout is now Special Advisor to Governor Brown; her approach could be a template for other programmatic Clean
Tech advancement efforts, perhaps managed by PIER.
(2) VC level of Interest in
Conversion of Waste to Fuels and Energy?
· All comes down
to the Money: can the conversion be accomplished economically, given the challenges of feedstock supply
uncertainties, expensive abortive and complicated permitting pathways, public opposition.
· "It is the Role
of Government to distort the Market for the Public's Benefit"; here, agency direction is needed to organize the
needed supply infrastructure.
(3) Do surrounding states have,
and/or need, a "PIER" program?
· Arizona and
Oregon have straight-forward permitting mechanisms for technology and project development, and little stands in the
way of rapid commercialization. Oregon also has a many-layered support program.
To maintain the "Venture Forum"
perspective addressing the questions surrounding re-authorization of the PIER program, this Focus Report addresses
in detail only the VC elements, not the start-up case studies. Clearly, companies were chosen to provide examples
of PIER support success; just as clearly, the majority now struggle with scale-up and the general lack of support
for full-scale testing.
After the Clean Tech
representatives completed their presentations, Teru posed one final question for the Clean Tech
How important is
external technology verification (ETV) to your company's ability
to secure funding and successfully enter the global marketplace?
All companies presenting agreed
whole heartedly: The ability to receive third-party assessment and validation remains one of the most important
steps in commercialization. When we only present data we ourselves have paid for, it is completely understandable
that few will expend their resources to support and adopt our systems and methods. There must be means to
present systems for assessment by outside expertise. Without this avenue, marketing is simply unqualified
Whether the PIER program can
provide grant funds directly to a technology or not, perhaps the programs most essential function should be to
orchestrate at-scale trials and test beds, where emerging clean tech efficacy can be proven, or disproven. As noted
by Dan Adler of CalCEF, the ability to embrace our failures and move forward is one of the most important of
American qualities. A PIER-directed ETV program could provide a safe-haven for Clean Tech to try, fail, fix and
© Teru Talk by JDMT, Inc 2011. All rights
You are free to reprint and use this report as long as no
changes are made to its content or references and credit is given to the author, Michael Theroux.