"The Immutable Principles of Energy" Jim Halloran
1. Never confuse reserves with production.
2. The biggest, best fields are discovered first.
3. Commodities are priced at the margin – the last 1% dictates the price.
4. E&P companies are serial destroyers of capital. Any appearance to the contrary is a temporary aberration, usually due to hoped-for, unsustainable pricing gains.
5. More than any other sector, time is money with respect to Energy.
6. The more efficient we become in our use of energy, the more we will use (Jevons’ Paradox).
7. The more society expands and demands greater access to energy, the more it will create roadblocks to its delivery.
8. We desire six qualities in our energy sources: 1) Affordability (cheap); 2) Abundance; 3) Reliability; 4) Purity; 5) Universal access; 6) Environmentally friendly. There is no set of circumstances under which all of these can exist simultaneously.
9. There exists at least a “$2 differential” between crude oil and competing sources of energy, regardless of the price of crude oil.
10. In dealing with OPEC, pay attention to what its members do, and give little heed to what they say.
11. Governments look at energy fields as sources of revenue, not as sources of energy:
· Governments have a disincentive to promote efficiency/conservation
· Income streams will be protected as to magnitude
· Long-term energy planning is incompatible with political realities
12. Once a field goes into decline, it will not increase production beyond this peak in the future without capex infusions that will prove to be uneconomic.
13. Crude oil is universal. The price you pay for gasoline is determined more by the small producer in Colombia than by the Wal*Mart on the corner
14. Natural gas is local. The price will continue to be set by continental production even after the lawyers have given up fighting the LNG terminals.
15. The media know nothing about the oil business. The more strident the published predictions of a price extension above (below) extreme levels, the closer the oil market is to a temporary top (bottom)
16. “It’s always something” - Roseanne Roseannadanna
Sunday, December 13, 2009
Wednesday, November 11, 2009
Lightspeed's venture into Cleantech
Taken from http://www.lightspeedvp.com/news/stories/LSVP_20070829.pdf
Outstanding article on Challenges and Potential growth for Cleantech
When emerging sectors or geographies erupt onto the investment scene - such as China, India, or cleantech – generalist VCs like Lightspeed have to determine whither and how to extend their franchise into a new area. Some generalist firms simply grow a practice by hiring partners away from specialist firms, while others observe from the periphery, sending team members to conferences and selectively seeing deals.
At Lightspeed, we have taken a phased approach by initially making a focused effort to divert resources into cleantech, with a goal of expanding presence over time – but what were some of our considerations before taking the plunge? What might have potentially given us further pause? From an initial survey of the space, we quickly
observed a number of structural challenges for generalist VCs to ramp up quickly and get comfortable with cleantech investing.
First, cleantech comprises an umbrella of sectors that draws from a vast range of technologies and sciences. On an average day, one may evaluate solar concentrators using thin-film cells (materials science, physics, optics), enzymes that facilitate biofuel production (synthetic biology, biochemistry), alternative proton exchange membranes for fuel cells (nanotech, chemistry), and ocean-wave-powered generators (fluid dynamics). For generalist VCs who are more used to dealing with bits and bytes as opposed to bandgap absorption wavelengths and alkane-producing algae, properly evaluating such investments can be a nontrivial task.
Second, cleantech startups have to deal with a range of macroeconomic, policy, and regulatory externalities that are often absent in IT investments. The solar and biofuels sectors continue to depend on subsidies and face upstream feedstock supply issues. Smart grid or water purification companies need to sell into utilities or municipalities, whose purchase affinity can change with evolving regulations. At a roader level, any major shifts in electricity and oil price trends could represent a doomsday scenario for multiple sectors.
Third, many cleantech plays require a different style of investing vis-à-vis eneralist IT deals. Many companies that have a technology founded in advanced materials, enzymes, or catalysts can have long development timelines that match more closely with biotech or pharmaceutical investments. Others have capital requirements from capacity expansion that are more characteristic of project finance or private equity type deals. Similarly, opportunities in “hot” areas like solar concentrators, thin-film, and cellulosic ethanol that have reached lofty valuations may look less like venture-backable deals. As such, for many generalist funds with shorter time horizons or smaller fund sizes, cleantech can pose significant structural and financial challenges.
Finally, the increased number of entrepreneurs coming out of the woodwork to dust off their 20-year-old solar concentrator concept or backyard biodiesel refinery has
also served to depress the signal-to-noise ratio, making it harder to find quality deals and solid management teams. Early-stage founders often have less experience in building teams and scaling production, and successful serial cleantech entrepreneurs remain few and far between. In addition, the geographical diversity of the opportunities in this space adds further challenge to deal sourcing and management team recruiting.
While the amalgam of the above challenges can overwhelm at times, Lightspeed continues to be bullish on cleantech. What are some factors that give us
confidence that the space holds promise for outsized returns?
• Massive global energy markets served and strong macroeconomic tailwinds. Overall energy demand has marched upward relentlessly in recent decades, with electricity generation nearly doubling in the U.S. and up eightfold in China since 1980. Solar,
biofuels, wind, storage, grid management, and water purification each already represent multibillion dollar markets, yet alternative energy in sum accounts
for only approximately 5 percent of total energy output today. As such, we believe that many of these sectors have double-digit growth potential, especially with rising oil and natural gas prices and increased concerns over national security.
Further, in sectors like solar, biofuels, clean coal, and clean water, we
have observed that supply-demand imbalances have reduced market and customer risk; if you can produce it at reasonable cost, someone will buy it.
• Improved cost economics. The intersection of technology- and scale-driven cost reductions within cleantech sectors and recent price increases for traditional energy sources has made a range of business models viable. Solar, for example, has
reached grid-parity pricing (with subsidies) in select geographies for the first time in the sector’s history, and as the industry continues to scale rapidly and
go up the learning curve, we believe solar costs will drive closer to today’s power rates. A similar phenomenon can be seen in the biofuels sector, where economies of scale combined with subsidies have closed the cost gap between crop-feedstock based
biofuels and petroleum-based fuels.
Significant technology headroom for innovation. Many of today’s companies utilize decades-old design approaches and manufacturing practices. For example, in solar, crystalline PV upstream processes are based on old techniques from the semiconductor industry, and the most oft-discussed thin-film materials such as copper indium gallium selenide (CIGS) have remained relatively unchanged for decades. Thus, as a new wave of technologists experiment with processes and materials designed to optimize for solar applications, they have an opportunity to create PV cells with quantum leaps in efficiency and cost reductions. Beyond solar, recent advances in synthetic biology have created enzymes and microorganisms that enable the use of noncrop biofuel feedstock and step-function changes in production yields. We have also seen recent breakthroughs in nanotechnology and materials science that have interesting applications for slowmoving sectors like batteries, fuel cells, and water
purification. The increasing number of world-class technologists and non-cleantech serial entrepreneurs now lending their talents to the emerging space should further increase the opportunities for disruptive innovation.
• Opportunities to play to Lightspeed’s strengths.
As we venture deeper into cleantech, we have found that certain aspects of our firm’s experience,network, and investment model actually help overcome the challenges related to this space. With deep roots in early-stage semiconductor investing,we have helped entrepreneurs build successful businesses and top management teams in an industry that relies on fast-cycle-time technical R&D, strong manufacturing execution, and heavy pre-revenue investment in capital equipment
– not too different from the lifecycle of many cleantech operations. Further, we have observed many well-respected, senior-level veterans from the semiconductor, networking infrastructure, and software sectors exploring cleantech ventures of
late, and we believe that the entrepreneurial DNA of emerging companies in this space will increasingly come from industries where Lightspeed has a robust
network. Our global platform, including investment programs in China, India, and Israel, also gives our portfolio companies access to opportunities for new
deals and potential customers in key international markets for cleantech. Indeed, we feel strongly that generalist VCs do have capabilities that can lend well to cleantech investing.
• Government, corporate, and social imperatives.
There has not been a time in recent memory when public and private sentiment aligned so well in supporting clean technologies as it has today. Governments worldwide have instituted tax subsidies and incentives for consumers to use clean energy sources and manufacturers to make “greener” products. In the U.S., an emerging portfolio of compliance laws and regulatory policies has targeted traditional energy providers like coal-fired plants to seek cleaner, lower-emissions alternatives.
Meanwhile, major corporations like Google, Wal-Mart, AMD, and British Petroleum have sponsored initiatives to increase the usage of renewable energy. BP made the headlines earlier this year in partnering with the Lawrence Berkeley National Laboratory to lead a $500 million research effort to develop new sources of energy. We feel that at least in the short-term, such social sentiment will help support the economic value proposition for cleantech, move industry-wide R&D efforts along, and contribute to public and investor interest in the space.
Armed with conviction in the market fundamentals, cost economics, and technology headroom in cleantech, Lightspeed has pursued investments with a concentrated internal effort and external collaboration with many of our specialist and generalist
VC colleagues. After having seen 300-plus deals that span the breadth of sectors, we are well-calibrated and have embarked on the beginning of our focused investment program in cleantech. With a portfolio of four companies to date spanning the energy storage, biofuels, LED lighting, and clean coal sectors, we believe we are off to a strong start and will continue to make an impact in cleantech.
Outstanding article on Challenges and Potential growth for Cleantech
When emerging sectors or geographies erupt onto the investment scene - such as China, India, or cleantech – generalist VCs like Lightspeed have to determine whither and how to extend their franchise into a new area. Some generalist firms simply grow a practice by hiring partners away from specialist firms, while others observe from the periphery, sending team members to conferences and selectively seeing deals.
At Lightspeed, we have taken a phased approach by initially making a focused effort to divert resources into cleantech, with a goal of expanding presence over time – but what were some of our considerations before taking the plunge? What might have potentially given us further pause? From an initial survey of the space, we quickly
observed a number of structural challenges for generalist VCs to ramp up quickly and get comfortable with cleantech investing.
First, cleantech comprises an umbrella of sectors that draws from a vast range of technologies and sciences. On an average day, one may evaluate solar concentrators using thin-film cells (materials science, physics, optics), enzymes that facilitate biofuel production (synthetic biology, biochemistry), alternative proton exchange membranes for fuel cells (nanotech, chemistry), and ocean-wave-powered generators (fluid dynamics). For generalist VCs who are more used to dealing with bits and bytes as opposed to bandgap absorption wavelengths and alkane-producing algae, properly evaluating such investments can be a nontrivial task.
Second, cleantech startups have to deal with a range of macroeconomic, policy, and regulatory externalities that are often absent in IT investments. The solar and biofuels sectors continue to depend on subsidies and face upstream feedstock supply issues. Smart grid or water purification companies need to sell into utilities or municipalities, whose purchase affinity can change with evolving regulations. At a roader level, any major shifts in electricity and oil price trends could represent a doomsday scenario for multiple sectors.
Third, many cleantech plays require a different style of investing vis-à-vis eneralist IT deals. Many companies that have a technology founded in advanced materials, enzymes, or catalysts can have long development timelines that match more closely with biotech or pharmaceutical investments. Others have capital requirements from capacity expansion that are more characteristic of project finance or private equity type deals. Similarly, opportunities in “hot” areas like solar concentrators, thin-film, and cellulosic ethanol that have reached lofty valuations may look less like venture-backable deals. As such, for many generalist funds with shorter time horizons or smaller fund sizes, cleantech can pose significant structural and financial challenges.
Finally, the increased number of entrepreneurs coming out of the woodwork to dust off their 20-year-old solar concentrator concept or backyard biodiesel refinery has
also served to depress the signal-to-noise ratio, making it harder to find quality deals and solid management teams. Early-stage founders often have less experience in building teams and scaling production, and successful serial cleantech entrepreneurs remain few and far between. In addition, the geographical diversity of the opportunities in this space adds further challenge to deal sourcing and management team recruiting.
While the amalgam of the above challenges can overwhelm at times, Lightspeed continues to be bullish on cleantech. What are some factors that give us
confidence that the space holds promise for outsized returns?
• Massive global energy markets served and strong macroeconomic tailwinds. Overall energy demand has marched upward relentlessly in recent decades, with electricity generation nearly doubling in the U.S. and up eightfold in China since 1980. Solar,
biofuels, wind, storage, grid management, and water purification each already represent multibillion dollar markets, yet alternative energy in sum accounts
for only approximately 5 percent of total energy output today. As such, we believe that many of these sectors have double-digit growth potential, especially with rising oil and natural gas prices and increased concerns over national security.
Further, in sectors like solar, biofuels, clean coal, and clean water, we
have observed that supply-demand imbalances have reduced market and customer risk; if you can produce it at reasonable cost, someone will buy it.
• Improved cost economics. The intersection of technology- and scale-driven cost reductions within cleantech sectors and recent price increases for traditional energy sources has made a range of business models viable. Solar, for example, has
reached grid-parity pricing (with subsidies) in select geographies for the first time in the sector’s history, and as the industry continues to scale rapidly and
go up the learning curve, we believe solar costs will drive closer to today’s power rates. A similar phenomenon can be seen in the biofuels sector, where economies of scale combined with subsidies have closed the cost gap between crop-feedstock based
biofuels and petroleum-based fuels.
Significant technology headroom for innovation. Many of today’s companies utilize decades-old design approaches and manufacturing practices. For example, in solar, crystalline PV upstream processes are based on old techniques from the semiconductor industry, and the most oft-discussed thin-film materials such as copper indium gallium selenide (CIGS) have remained relatively unchanged for decades. Thus, as a new wave of technologists experiment with processes and materials designed to optimize for solar applications, they have an opportunity to create PV cells with quantum leaps in efficiency and cost reductions. Beyond solar, recent advances in synthetic biology have created enzymes and microorganisms that enable the use of noncrop biofuel feedstock and step-function changes in production yields. We have also seen recent breakthroughs in nanotechnology and materials science that have interesting applications for slowmoving sectors like batteries, fuel cells, and water
purification. The increasing number of world-class technologists and non-cleantech serial entrepreneurs now lending their talents to the emerging space should further increase the opportunities for disruptive innovation.
• Opportunities to play to Lightspeed’s strengths.
As we venture deeper into cleantech, we have found that certain aspects of our firm’s experience,network, and investment model actually help overcome the challenges related to this space. With deep roots in early-stage semiconductor investing,we have helped entrepreneurs build successful businesses and top management teams in an industry that relies on fast-cycle-time technical R&D, strong manufacturing execution, and heavy pre-revenue investment in capital equipment
– not too different from the lifecycle of many cleantech operations. Further, we have observed many well-respected, senior-level veterans from the semiconductor, networking infrastructure, and software sectors exploring cleantech ventures of
late, and we believe that the entrepreneurial DNA of emerging companies in this space will increasingly come from industries where Lightspeed has a robust
network. Our global platform, including investment programs in China, India, and Israel, also gives our portfolio companies access to opportunities for new
deals and potential customers in key international markets for cleantech. Indeed, we feel strongly that generalist VCs do have capabilities that can lend well to cleantech investing.
• Government, corporate, and social imperatives.
There has not been a time in recent memory when public and private sentiment aligned so well in supporting clean technologies as it has today. Governments worldwide have instituted tax subsidies and incentives for consumers to use clean energy sources and manufacturers to make “greener” products. In the U.S., an emerging portfolio of compliance laws and regulatory policies has targeted traditional energy providers like coal-fired plants to seek cleaner, lower-emissions alternatives.
Meanwhile, major corporations like Google, Wal-Mart, AMD, and British Petroleum have sponsored initiatives to increase the usage of renewable energy. BP made the headlines earlier this year in partnering with the Lawrence Berkeley National Laboratory to lead a $500 million research effort to develop new sources of energy. We feel that at least in the short-term, such social sentiment will help support the economic value proposition for cleantech, move industry-wide R&D efforts along, and contribute to public and investor interest in the space.
Armed with conviction in the market fundamentals, cost economics, and technology headroom in cleantech, Lightspeed has pursued investments with a concentrated internal effort and external collaboration with many of our specialist and generalist
VC colleagues. After having seen 300-plus deals that span the breadth of sectors, we are well-calibrated and have embarked on the beginning of our focused investment program in cleantech. With a portfolio of four companies to date spanning the energy storage, biofuels, LED lighting, and clean coal sectors, we believe we are off to a strong start and will continue to make an impact in cleantech.
Four Trade Secrets for Clean Tech Entrepreneurs in Small Countries
Very Interesting Article from http://www.huffingtonpost.com/karin-kloosterman/4-trade-secrets-for-clean_b_312046.html
A plucky little country, is how the late Princess Diana once described Israel to Shimon Peres. About the size of New Jersey, Israel has a disproportionate number of clean tech companies and investment in clean technology compared to its size. And now businessman and investor David Anthony from 21Ventures in the US is about to reveal his trade secrets and insider information about clean tech investing in Israel. If you are itching to become a clean tech entrepreneur in Israel, this is must-read information. If you'd like to know more about what makes the industry tick, read on. His advice applies to many other small countries interested in ramping up development and investment in clean tech.
Unlike Silicon Valley and the high-tech industry, the clean tech market today has no center of excellence, Anthony tells Green Prophet. In the last 50 years of venture capital investing there has been a saying: Never fly over your company -- meaning one shouldn't invest in a company that isn't within a 60 mile radius of the office. But without a center for clean technology, explains Anthony, a VC fund now has to dig into new territory to find the golden investment egg. Investors need to cross borders and turn over new stones.
light bulb sprouting green roots photo 21ventures
Compared to any other country in the Middle East, Israel is a clear and defined leader in this market, so we've focused on Israel. Most of Anthony's tips could work in other non-US locales as well.
First a short background on Israel:
According to Anthony, clean technology researchers are not the same scientists that the traditional Israeli technology environment was founded on. Focused primarily on IT and telecom, Israel's high-tech success came about as a result of Israelis joining the army and getting an electrical engineering degree. But this is not the case anymore in clean tech: "What did Israel need to succeed?" Anthony asks. "Telecom was critical. They needed to tap Arafat for 30 years. IT security obviously is critical for Israel so necessity has driven the Israeli technology economy to focus on IT and telecom."
But today, Israel and the world has bigger problems than Arafat, says Anthony:
Global warming and over-population and the combination of global warming and over-population is greatest problem of the 21st century. There are different types of scientists solving these problems like physical chemists and fluid dynamicists.
These are individuals who have not traditionally participated in the technology economy of Israel for the last 20 years. There is a disconnect between the entrepreneurs and the technology refugees because there are little opportunities now in IT and teleco.
Usually management types with electrical engineering backgrounds, this kind of training and background might not be applicable when "scouring scientists of major universities in Israel," says Anthony.
DAVID ANTHONY
david-anthony-21ventures-photo-invest-israel.jpg
How to bridge the divide and disconnect? Anthony, offers his trade secrets:
1. Scour universities. Troll these places before technology refugees get to them. Entrepreneurs are not digging deep enough at Israeli universities -- at the Weizmann Institute, The Technion, Bar Ilan University or Tel Aviv University. Entrepreneurs, he says, need to go out in the field and do their research. They need to meet with tech transfer officers to find out what's interesting.
"One of the great mysteries is why doesn't Israel have a leading solar energy company," Anthony asks. "Luz I was a failure ... Israel is not on the map of the Top 10. Why is Germany a big leader? Germany doesn't have sun."
It's because the entrepreneurs in Israel have not mined the scientists or scoured or searched deep enough, he reasons. Time to get busy:
Read Science Daily, a compendium of scientific released from universities around the world.
Go and visit the tech transfer offices, like Ramot at Tel Aviv University.
Contact scientists directly. Tell them: I would love to sit and talk with you about the potential for commercializing your research.
"What I do isn't brilliant or insightful," says Anthony. "It's like being a basketball scout: but at universities you are dealing with scientists instead of 16-year-old seven footers."
2. Be less practical and forget about getting to the top. According to Anthony Americans are less practical than Israelis might think. Living in 7,000 square foot homes, Israelis who live in 4-room apartments don't see how impractical Americans really are, he says. Even though milestones and pilot projects are developed in Israel through connections and limited funds, "Adopting technology quickly doesn't always win."
Instead of wasting years and money developing a pilot in Israel, one needs referencable customers in the US to attract US investment. The Israeli military mentality doesn't translate well in America, North America or Asia. Nor does aspiring to get to the top quickly, says Anthony.
Let's forget about going to the top. Israelis are good at tinkering and improvising and getting a prototype. ... If I tell someone my security software is defending the Israel Defense Forces, Americans want to know who is your US customer.
The bottom line: don't bank on pilot projects in Israel.
3. Bet your life on your research. Israeli scientists, unlike those in the US, are not as quick to leave the comfort of academia. Being a scientist and having a position at a university commands more respect in Israeli culture than in the US, meaning the Israelis are less likely to leave their tenure.
Anthony asks:
But if I am investor and you're at Bar Ilan University or the Technion, am I supposed to put my money in you if you aren't betting your life? This is something that IT scientists understand, but I don't think it has reached the clean tech researchers yet. I want a CTO full-time.
There is something about betting your life on a business. If you don't, then it's hard for me as an investor, with an investment ranging from $10 to $15 million over a set of milestones.
4. Build a business plan and milestones with teeth. The last tip, Anthony offers is for entrepreneurs to build a solid business plans with milestones mapped out. This demonstrates to him the increasing value of the company.
In today's market, my most difficult job negotiating is not the price, but the teeth of the milestones. That to me is always the weakness in business plans and I see it in presentations: someone will say I need $4 to 10 million. This needs to be broken down into 4 or 5 milestones over 3 or 4 years. Thinking out those milestones, commercial milestones, collaborative milestones ahead of time is the best way to get my attention.
If you have an opportunity and solve a huge problem, then I am interested. If you thought out the milestones well, then I have a compatibility with you.
David Anthony is the founder and manager of 21Ventures, a virtual clean technology incubator focusing on the ideas and innovations that will dominate the 21st century. You can follow him on Twitter at http://twitter.com/DavidAnthony21
Karin Kloosterman is the founder of Green Prophet, a green news site covering green business and environment news from Israel and the Middle East. See www.greenprophet.com.
A plucky little country, is how the late Princess Diana once described Israel to Shimon Peres. About the size of New Jersey, Israel has a disproportionate number of clean tech companies and investment in clean technology compared to its size. And now businessman and investor David Anthony from 21Ventures in the US is about to reveal his trade secrets and insider information about clean tech investing in Israel. If you are itching to become a clean tech entrepreneur in Israel, this is must-read information. If you'd like to know more about what makes the industry tick, read on. His advice applies to many other small countries interested in ramping up development and investment in clean tech.
Unlike Silicon Valley and the high-tech industry, the clean tech market today has no center of excellence, Anthony tells Green Prophet. In the last 50 years of venture capital investing there has been a saying: Never fly over your company -- meaning one shouldn't invest in a company that isn't within a 60 mile radius of the office. But without a center for clean technology, explains Anthony, a VC fund now has to dig into new territory to find the golden investment egg. Investors need to cross borders and turn over new stones.
light bulb sprouting green roots photo 21ventures
Compared to any other country in the Middle East, Israel is a clear and defined leader in this market, so we've focused on Israel. Most of Anthony's tips could work in other non-US locales as well.
First a short background on Israel:
According to Anthony, clean technology researchers are not the same scientists that the traditional Israeli technology environment was founded on. Focused primarily on IT and telecom, Israel's high-tech success came about as a result of Israelis joining the army and getting an electrical engineering degree. But this is not the case anymore in clean tech: "What did Israel need to succeed?" Anthony asks. "Telecom was critical. They needed to tap Arafat for 30 years. IT security obviously is critical for Israel so necessity has driven the Israeli technology economy to focus on IT and telecom."
But today, Israel and the world has bigger problems than Arafat, says Anthony:
Global warming and over-population and the combination of global warming and over-population is greatest problem of the 21st century. There are different types of scientists solving these problems like physical chemists and fluid dynamicists.
These are individuals who have not traditionally participated in the technology economy of Israel for the last 20 years. There is a disconnect between the entrepreneurs and the technology refugees because there are little opportunities now in IT and teleco.
Usually management types with electrical engineering backgrounds, this kind of training and background might not be applicable when "scouring scientists of major universities in Israel," says Anthony.
DAVID ANTHONY
david-anthony-21ventures-photo-invest-israel.jpg
How to bridge the divide and disconnect? Anthony, offers his trade secrets:
1. Scour universities. Troll these places before technology refugees get to them. Entrepreneurs are not digging deep enough at Israeli universities -- at the Weizmann Institute, The Technion, Bar Ilan University or Tel Aviv University. Entrepreneurs, he says, need to go out in the field and do their research. They need to meet with tech transfer officers to find out what's interesting.
"One of the great mysteries is why doesn't Israel have a leading solar energy company," Anthony asks. "Luz I was a failure ... Israel is not on the map of the Top 10. Why is Germany a big leader? Germany doesn't have sun."
It's because the entrepreneurs in Israel have not mined the scientists or scoured or searched deep enough, he reasons. Time to get busy:
Read Science Daily, a compendium of scientific released from universities around the world.
Go and visit the tech transfer offices, like Ramot at Tel Aviv University.
Contact scientists directly. Tell them: I would love to sit and talk with you about the potential for commercializing your research.
"What I do isn't brilliant or insightful," says Anthony. "It's like being a basketball scout: but at universities you are dealing with scientists instead of 16-year-old seven footers."
2. Be less practical and forget about getting to the top. According to Anthony Americans are less practical than Israelis might think. Living in 7,000 square foot homes, Israelis who live in 4-room apartments don't see how impractical Americans really are, he says. Even though milestones and pilot projects are developed in Israel through connections and limited funds, "Adopting technology quickly doesn't always win."
Instead of wasting years and money developing a pilot in Israel, one needs referencable customers in the US to attract US investment. The Israeli military mentality doesn't translate well in America, North America or Asia. Nor does aspiring to get to the top quickly, says Anthony.
Let's forget about going to the top. Israelis are good at tinkering and improvising and getting a prototype. ... If I tell someone my security software is defending the Israel Defense Forces, Americans want to know who is your US customer.
The bottom line: don't bank on pilot projects in Israel.
3. Bet your life on your research. Israeli scientists, unlike those in the US, are not as quick to leave the comfort of academia. Being a scientist and having a position at a university commands more respect in Israeli culture than in the US, meaning the Israelis are less likely to leave their tenure.
Anthony asks:
But if I am investor and you're at Bar Ilan University or the Technion, am I supposed to put my money in you if you aren't betting your life? This is something that IT scientists understand, but I don't think it has reached the clean tech researchers yet. I want a CTO full-time.
There is something about betting your life on a business. If you don't, then it's hard for me as an investor, with an investment ranging from $10 to $15 million over a set of milestones.
4. Build a business plan and milestones with teeth. The last tip, Anthony offers is for entrepreneurs to build a solid business plans with milestones mapped out. This demonstrates to him the increasing value of the company.
In today's market, my most difficult job negotiating is not the price, but the teeth of the milestones. That to me is always the weakness in business plans and I see it in presentations: someone will say I need $4 to 10 million. This needs to be broken down into 4 or 5 milestones over 3 or 4 years. Thinking out those milestones, commercial milestones, collaborative milestones ahead of time is the best way to get my attention.
If you have an opportunity and solve a huge problem, then I am interested. If you thought out the milestones well, then I have a compatibility with you.
David Anthony is the founder and manager of 21Ventures, a virtual clean technology incubator focusing on the ideas and innovations that will dominate the 21st century. You can follow him on Twitter at http://twitter.com/DavidAnthony21
Karin Kloosterman is the founder of Green Prophet, a green news site covering green business and environment news from Israel and the Middle East. See www.greenprophet.com.
Thursday, October 29, 2009
Very interesting post - 3 challenges of Cleantech
According to Deborah Fleischer, one of the coaches at Cleantechopen semifinalists, here 3 challenges of Cleantech
1. Lifecycle assessment (LCA): LCA is an approach that considers the cradle-to-grave lifecycle chain involved in producing, using and disposing of a product or service. It forces you to consider materials use, energy consumption and related greenhouse-gas emissions of your product, packaging and transportation decisions.
While larger corporations might have the resources to tackle LCA head on, across the board, the start-ups were struggling with easily accessing good data to help them estimate the key impacts associated with their entire value chain.
As a post on SustainableMinds says, “Paper or plastic? Diesel or hybrid? Extrude or blow-mold? Some of the most difficult problems in designing sustainable products involve making the right choices in materials, processes and transportation methods. However, choosing the options that will actually have a lower environmental impact is much more complex that one would think.”
A few LCA resources for start-ups to consider include Sustainable Minds, Earthster and EIO-LCA.
In a recent post, Joel Makower had this to say about Earthster, “…an open-source consortium that is inviting professionals to upload LCA data and methodologies in order to simplify and “democratize” LCA, while improving the quality by pooling nonproprietary information about products and processes. Earthster is garnering buzz within the LCA crowd as a potential game-changing technology.”
My advice–be strategic and focus on the largest pieces of your footprint. Avoid petroleum-based products. Think about the end of life and how the product can be recycled or reused. And don’t forget to consider packaging and transportation choices.
2. Packaging: Many of these clean tech products require packaging and pushing for recycled content and avoiding plastic is a challenge for a CEO with twenty other competing priorities. I argue that companies can maximize market share by making a commitment to greener packaging. Key customers and stakeholders are making demands for sustainable packaging.
The Sustainable Packaging Coalition is a great resource on this issue.
They define sustainable packaging as:
1. Beneficial, safe & healthy for individuals and communities throughout its life cycle;
2. Meeting market criteria for performance and cost;
3. Sourced, manufactured, transported, and recycled using renewable energy;
4. Maximizing the use of renewable or recycled source materials;
5. Manufactured using clean production technologies and best practices;
6. Made from materials healthy in all probable end of life scenarios;
7. Physically designed to optimize materials and energy;
8. Effectively recovered and utilized in biological and/or industrial cradle to cradle cycles.
The Coalition’s new tool, COMPASS , is a free resource to help companies assess their packaging choices.
However, again, I would stress simplicity. Avoid petroleum-based plastics and consider bio-based plastic. Maximize the use of post-consumer recycled content. And reduce the size of your packaging to the maximum extent possible.
3. End of life: Thinking about what happens to these new “clean” products at end of life is challenging. How do you create incentives to get consumers to recycle or return a product? One of the start-ups was considering a rebate program and another planning on using a mailer to make it easy to return the product at the end of its life.
"
This seems more in line with making green products. I would add that cleantech is especially challenging if you agree to all these 3 challenges, and at the same time attempt to be cost competitive with existing offerings. To me, cleantech companies should have the mentality that customers are not willing to pay more for the existing offering, eg. more cents per kWh of electricity.
On another post, a very interesting comment by a VC says that cleantech companies seems to make losses first and profits later, which is the opposite of internet companies, which made big winners for VCs but loses later. That's a very interesting comment of looking at cleantech and the challenge is probably looking for the particular approach in cleantech that can be the next wave of disruptive changes.
This seems to go hand-in-hand with what a VC compared cleantech and internet companies with
1. Lifecycle assessment (LCA): LCA is an approach that considers the cradle-to-grave lifecycle chain involved in producing, using and disposing of a product or service. It forces you to consider materials use, energy consumption and related greenhouse-gas emissions of your product, packaging and transportation decisions.
While larger corporations might have the resources to tackle LCA head on, across the board, the start-ups were struggling with easily accessing good data to help them estimate the key impacts associated with their entire value chain.
As a post on SustainableMinds says, “Paper or plastic? Diesel or hybrid? Extrude or blow-mold? Some of the most difficult problems in designing sustainable products involve making the right choices in materials, processes and transportation methods. However, choosing the options that will actually have a lower environmental impact is much more complex that one would think.”
A few LCA resources for start-ups to consider include Sustainable Minds, Earthster and EIO-LCA.
In a recent post, Joel Makower had this to say about Earthster, “…an open-source consortium that is inviting professionals to upload LCA data and methodologies in order to simplify and “democratize” LCA, while improving the quality by pooling nonproprietary information about products and processes. Earthster is garnering buzz within the LCA crowd as a potential game-changing technology.”
My advice–be strategic and focus on the largest pieces of your footprint. Avoid petroleum-based products. Think about the end of life and how the product can be recycled or reused. And don’t forget to consider packaging and transportation choices.
2. Packaging: Many of these clean tech products require packaging and pushing for recycled content and avoiding plastic is a challenge for a CEO with twenty other competing priorities. I argue that companies can maximize market share by making a commitment to greener packaging. Key customers and stakeholders are making demands for sustainable packaging.
The Sustainable Packaging Coalition is a great resource on this issue.
They define sustainable packaging as:
1. Beneficial, safe & healthy for individuals and communities throughout its life cycle;
2. Meeting market criteria for performance and cost;
3. Sourced, manufactured, transported, and recycled using renewable energy;
4. Maximizing the use of renewable or recycled source materials;
5. Manufactured using clean production technologies and best practices;
6. Made from materials healthy in all probable end of life scenarios;
7. Physically designed to optimize materials and energy;
8. Effectively recovered and utilized in biological and/or industrial cradle to cradle cycles.
The Coalition’s new tool, COMPASS , is a free resource to help companies assess their packaging choices.
However, again, I would stress simplicity. Avoid petroleum-based plastics and consider bio-based plastic. Maximize the use of post-consumer recycled content. And reduce the size of your packaging to the maximum extent possible.
3. End of life: Thinking about what happens to these new “clean” products at end of life is challenging. How do you create incentives to get consumers to recycle or return a product? One of the start-ups was considering a rebate program and another planning on using a mailer to make it easy to return the product at the end of its life.
"
This seems more in line with making green products. I would add that cleantech is especially challenging if you agree to all these 3 challenges, and at the same time attempt to be cost competitive with existing offerings. To me, cleantech companies should have the mentality that customers are not willing to pay more for the existing offering, eg. more cents per kWh of electricity.
On another post, a very interesting comment by a VC says that cleantech companies seems to make losses first and profits later, which is the opposite of internet companies, which made big winners for VCs but loses later. That's a very interesting comment of looking at cleantech and the challenge is probably looking for the particular approach in cleantech that can be the next wave of disruptive changes.
This seems to go hand-in-hand with what a VC compared cleantech and internet companies with
Thursday, October 15, 2009
FYP Update
The past few month have been quite hectic for me. Amidst all heavy coursework of being a final year material science and engineering student, I'm also juggling my final year project, thinking about my career, trying to hone my investing skills and developing a business.
That said, I find myself incredibly lucky to be in such a situation. Knowing myself to be a person that would rather handle multiple projects simultaneously, I feel motivated and full of energy for each task.
Of special interest is my Final Year Project. Building on what previous MIT scientist have done, we're following up to provide a deeper understanding on why and how their breakthrough happened the way it did. Potentially, it could be a ground-breaking revelation which could really help direct research in this area for years to come. Especially now when everyone's talking about batteries etc...
That said, I find myself incredibly lucky to be in such a situation. Knowing myself to be a person that would rather handle multiple projects simultaneously, I feel motivated and full of energy for each task.
Of special interest is my Final Year Project. Building on what previous MIT scientist have done, we're following up to provide a deeper understanding on why and how their breakthrough happened the way it did. Potentially, it could be a ground-breaking revelation which could really help direct research in this area for years to come. Especially now when everyone's talking about batteries etc...
Friday, August 7, 2009
3 Characteristics of the Next Generation of Cleantech Entrepreneurs
During the 2 week study mission around Silicon Valley, several different parties have independently come to the conclusion that Cleantech will provide the next biggest source of growth. Raj Alturu of DFJ gave a very convincing presentation on how cleantech will provide the greatest venture returns in the coming years. He's not alone. Mark Heesen, chairman of the NVCA (National Venture Capital Association) predicts that cleantech will become most invested sector by venture capitalist the next 5 years.
We’ve also managed to visit two successful companies in the Cleantech field – Tesla Motors and Nanosolar. Both companies are well-funded and have a strong management team with robust track records and proven operational/exceptional abilities. Microsoft is also going into the Cleantech area by focusing on energy efficient data centers as the next growth strategy. Companies such as GETIT, a consultancy company integrating green practices into IT, are also becoming more commonplace. Even the lawyers are on the bandwagon. Fred Greguras of K&L gates gave a very interesting account of the various types of cleantech projects to finance and displayed his interest in the angel investing of such projects in times to come.
All these come as little surprise to me. as I have already been working in this industry for the past 1 year. As an investment banking analyst at ReEx Capital Asia, one of the first few investment banks focusing in the Asian Clean Energy sector, I had the opportunity witness first-hand the growing interest in cleantech by both investors, entrepreneurs, consultants and lawyers, which is exactly what is happening now in Silicon Valley. What is different, however, is that this two weeks study mission exposed me other sectors that these players were involved in, namely the Information and Communication Technologies (ICT) and biotech. This exposure allowed me to crystallize my thoughts and to identify the challenges and opportunities that are unique to cleantech companies.
Firstly, cleantech is a resource play. There is no or little product differentiation – at the end of the day you’re going to have to come up with a solution that generates electricity in kWh that is cheaper and/or cleaner. In other words, all cleantech companies produces the same output and will be assessed by the same measuring system. It’s of little use if you can come up with a cleantech solution that sounds and looks sexy but doesn’t make economical sense to your consumers (unless you’re trying to selling to the pure environmentalists). Therefore, marketing still plays a part (see Tesla Motors and premium sports cars), but is less important as compared to ICT or biotech companies.
Second, cleantech companies will more likely result in incremental innovation rather than disruptive innovation. There are several reasons for this, but the most important factor is that in cleantech, as opposed to ICT and biotech, cleantech consumers already know what they want, and that is cheaper/cleaner electricity, water and/or air (see point 1). In contrast, consumers of ICT services often don’t know what they want until the trend actually takes place, allowing small start-ups to quickly become dominant players in the market (see Facebook, Twitter).
Another reason why cleantech companies will more likely result in incremental innovation is due to the higher barriers of entry for innovation in the cleantech space. Whereas a company such as Facebook/Twitter of any other ICT company can be started out by 4 computer engineers dropouts in an underground basement, the entrepreneurs of cleantech companies would require sound engineering and technical understanding in energy, research backgrounds and laboratories, and who has a track record of successfully deploying and operating current energy generation assets. Think PhDs with MBAs who have worked in big companies such as IDEA, IBM etc… and who has a track record of at least 10 years in the field.
Although I believe that most cleantech companies will result in incremental innovation, it is still possible for a cleantech company to result in a disruptive innovation that will revolutionize the world. This company will be spearheaded by the next-generation cleantech entrepreneur. The next generation of cleantech entrepreneur will require the creativity and vision to break through the old-fashioned thinking of incumbent energy generation technologies, and perhaps come up with radically new ways to harvest, store and distribute energy. Thus, he/she would need to have an engineering background together with contempt for the status quo and the ability to challenge long standing engineering principles and practices on a technical level.
Another requirement of the next generation cleantech entrepreneur is also the strong understanding of culture and social science. As compared to previous generations, energy generation and usage is increasing becoming less and less centralized and more and more localized/distributed. Entrepreneurs of cleantech would be required to understand how their technology/product will work in the local context and culture more so then in the past.
However, one thing that has not changed is that the next generation cleantech entrepreneur would also require a strong management team with strong execution/operational ability from day 1 – to test the engineering assumptions and to build and develop the product. Such a management team would also provide strong networks to potential suppliers and customers, which is of paramount importance. This brings us back to point number 1 – which is that cleantech, in the end, is still a resource play.
In conclusion, the next generation cleantech entrepreneurs that will create a radically disruptive cleantech start-up would have an engineering degree with strong creativity, a strong understanding of culture and social science, and has the ability to attract strong management team with years of execution and operational ability.
We’ve also managed to visit two successful companies in the Cleantech field – Tesla Motors and Nanosolar. Both companies are well-funded and have a strong management team with robust track records and proven operational/exceptional abilities. Microsoft is also going into the Cleantech area by focusing on energy efficient data centers as the next growth strategy. Companies such as GETIT, a consultancy company integrating green practices into IT, are also becoming more commonplace. Even the lawyers are on the bandwagon. Fred Greguras of K&L gates gave a very interesting account of the various types of cleantech projects to finance and displayed his interest in the angel investing of such projects in times to come.
All these come as little surprise to me. as I have already been working in this industry for the past 1 year. As an investment banking analyst at ReEx Capital Asia, one of the first few investment banks focusing in the Asian Clean Energy sector, I had the opportunity witness first-hand the growing interest in cleantech by both investors, entrepreneurs, consultants and lawyers, which is exactly what is happening now in Silicon Valley. What is different, however, is that this two weeks study mission exposed me other sectors that these players were involved in, namely the Information and Communication Technologies (ICT) and biotech. This exposure allowed me to crystallize my thoughts and to identify the challenges and opportunities that are unique to cleantech companies.
Firstly, cleantech is a resource play. There is no or little product differentiation – at the end of the day you’re going to have to come up with a solution that generates electricity in kWh that is cheaper and/or cleaner. In other words, all cleantech companies produces the same output and will be assessed by the same measuring system. It’s of little use if you can come up with a cleantech solution that sounds and looks sexy but doesn’t make economical sense to your consumers (unless you’re trying to selling to the pure environmentalists). Therefore, marketing still plays a part (see Tesla Motors and premium sports cars), but is less important as compared to ICT or biotech companies.
Second, cleantech companies will more likely result in incremental innovation rather than disruptive innovation. There are several reasons for this, but the most important factor is that in cleantech, as opposed to ICT and biotech, cleantech consumers already know what they want, and that is cheaper/cleaner electricity, water and/or air (see point 1). In contrast, consumers of ICT services often don’t know what they want until the trend actually takes place, allowing small start-ups to quickly become dominant players in the market (see Facebook, Twitter).
Another reason why cleantech companies will more likely result in incremental innovation is due to the higher barriers of entry for innovation in the cleantech space. Whereas a company such as Facebook/Twitter of any other ICT company can be started out by 4 computer engineers dropouts in an underground basement, the entrepreneurs of cleantech companies would require sound engineering and technical understanding in energy, research backgrounds and laboratories, and who has a track record of successfully deploying and operating current energy generation assets. Think PhDs with MBAs who have worked in big companies such as IDEA, IBM etc… and who has a track record of at least 10 years in the field.
Although I believe that most cleantech companies will result in incremental innovation, it is still possible for a cleantech company to result in a disruptive innovation that will revolutionize the world. This company will be spearheaded by the next-generation cleantech entrepreneur. The next generation of cleantech entrepreneur will require the creativity and vision to break through the old-fashioned thinking of incumbent energy generation technologies, and perhaps come up with radically new ways to harvest, store and distribute energy. Thus, he/she would need to have an engineering background together with contempt for the status quo and the ability to challenge long standing engineering principles and practices on a technical level.
Another requirement of the next generation cleantech entrepreneur is also the strong understanding of culture and social science. As compared to previous generations, energy generation and usage is increasing becoming less and less centralized and more and more localized/distributed. Entrepreneurs of cleantech would be required to understand how their technology/product will work in the local context and culture more so then in the past.
However, one thing that has not changed is that the next generation cleantech entrepreneur would also require a strong management team with strong execution/operational ability from day 1 – to test the engineering assumptions and to build and develop the product. Such a management team would also provide strong networks to potential suppliers and customers, which is of paramount importance. This brings us back to point number 1 – which is that cleantech, in the end, is still a resource play.
In conclusion, the next generation cleantech entrepreneurs that will create a radically disruptive cleantech start-up would have an engineering degree with strong creativity, a strong understanding of culture and social science, and has the ability to attract strong management team with years of execution and operational ability.
Thursday, July 23, 2009
An Alternative View to Stanford and Cleantech
The visit to Stanford University was very worth it today. Weeks before, I had heard from my backpacking friend very interesting stuff about Stanford’s particle accelerator, golf courses and outstanding (and cocky) students. At today’s trip, even though I got to see beautiful buildings, nice open spaces and rich history, what impressed me most was the spirit of giving.
Stanford, as the heart of Silicon Valley, has had a number of sucess stories of stanford graduates (and dropouts) creating high value companies that eventually went IPO or were sold. The founders, who include Bill Gates, Jerry Young and the HP duo, contributed significantly back to Stanford by donating to and having buildings erected in their name. This actions really demonstrated how strong the spirit of sharing and giving is at the valley. Singapore is certainly lacking in this department and have much room for improvement.
On another note, speaking with Anna and Laina from Getit was very interesting. They’re currently consultants to the Clean Tech Open, THE clean tech business plan competition here in America. They bring with them a wealth of experience from working in start-ups and large corporations. I got to know them and where they are coming from, a little bit better from a meeting after their talk, but it was a pity that I missed the bulk of the last presentation by Ooshma.
Stanford, as the heart of Silicon Valley, has had a number of sucess stories of stanford graduates (and dropouts) creating high value companies that eventually went IPO or were sold. The founders, who include Bill Gates, Jerry Young and the HP duo, contributed significantly back to Stanford by donating to and having buildings erected in their name. This actions really demonstrated how strong the spirit of sharing and giving is at the valley. Singapore is certainly lacking in this department and have much room for improvement.
On another note, speaking with Anna and Laina from Getit was very interesting. They’re currently consultants to the Clean Tech Open, THE clean tech business plan competition here in America. They bring with them a wealth of experience from working in start-ups and large corporations. I got to know them and where they are coming from, a little bit better from a meeting after their talk, but it was a pity that I missed the bulk of the last presentation by Ooshma.
Monday, July 13, 2009
Asia's First Cleantech Funds Now Raising Capital - June 8
http://www.businessweek.com/globalbiz/content/jun2009/gb2009068_880242.htm?chan=rss_topEmailedStories_ssi_5
Perhaps the biggest trend in private equity right now is investing in cleantech, a term that refers to products or services that improve operational performance, productivity or efficiency, while reducing energy consumption, waste and pollution. And PE managers in Asia are introducing the region's first dedicated cleantech funds, says Preqin, a London-based consultancy specialising in private equity and infrastructure.
According to Preqin, there are now four Asia-based PE funds trying to raise capital for dedicated cleantech funds. The two largest are from Hong Kong-based First Vanguard, which is raising $500 million for the China and Pacific Rim Water Infrastructure Fund; and Singapore-based Middle East & Asia Capital Partners, which is raising $400 million for its MAP Clean Energy Fund.
There are two more players raising $250 million funds: in Singapore, Ant Global Partners is financing its Ant Global Partners Cleantech Fund; and in Malaysia, Abundance Venture Capital seeks capital for its AVC Abundance Energy Fund.
The first private-equity or venture-capital fund to include a cleantech focus, within a diversified portfolio, emerged in 2005 in India, where IDFC closed a $440 million infrastructure fund. Then in 2006, China's Prax Capital closed a $153 million fund that included cleantech themes, as did China's Northern Light Venture Capital, which closed a $350 million fund.
Since then activity has picked up: in 2008, funds in India, China and Hong Kong closed over $5 billion worth of diversified funds that included cleantech plays, while earlier this year, Singapore's SEAVI Advent closed a $178 million diversified buyout fund.
Preqin says there are now at least 10 PE funds trying to raise capital towards themes that include cleantech, of which four are dedicated, as mentioned above. Together these 10 seek to raise up to $3.6 billion, with the four dedicated funds accounting for $1.4 billion of that.
Preqin has released a report on cleantech funds that shows huge interest among institutional investors and funds of funds. Despite the global financial crisis, overall cleantech fundraising remained steady in 2008, with 29 funds raising a total of $6 billion worldwide, roughly the same as was raised in 2007. The majority has gone to VC funds, with infrastructure funds also playing a big role.
In North America, funds this year seek to raise up to $9 billion, making this the biggest market, followed by European funds, which want to raise over $7 billion, Preqin says.
The consultants also find more than half of cleantech-focused VC firms prefer to take minority stakes, while buyout and infrastructure firms mostly prefer controlling stakes. For institutional investors, these funds represent the preferred means of accessing cleantech themes, as opposed to via the public markets, because the sector is too new to be well represented in the listed space.
Perhaps the biggest trend in private equity right now is investing in cleantech, a term that refers to products or services that improve operational performance, productivity or efficiency, while reducing energy consumption, waste and pollution. And PE managers in Asia are introducing the region's first dedicated cleantech funds, says Preqin, a London-based consultancy specialising in private equity and infrastructure.
According to Preqin, there are now four Asia-based PE funds trying to raise capital for dedicated cleantech funds. The two largest are from Hong Kong-based First Vanguard, which is raising $500 million for the China and Pacific Rim Water Infrastructure Fund; and Singapore-based Middle East & Asia Capital Partners, which is raising $400 million for its MAP Clean Energy Fund.
There are two more players raising $250 million funds: in Singapore, Ant Global Partners is financing its Ant Global Partners Cleantech Fund; and in Malaysia, Abundance Venture Capital seeks capital for its AVC Abundance Energy Fund.
The first private-equity or venture-capital fund to include a cleantech focus, within a diversified portfolio, emerged in 2005 in India, where IDFC closed a $440 million infrastructure fund. Then in 2006, China's Prax Capital closed a $153 million fund that included cleantech themes, as did China's Northern Light Venture Capital, which closed a $350 million fund.
Since then activity has picked up: in 2008, funds in India, China and Hong Kong closed over $5 billion worth of diversified funds that included cleantech plays, while earlier this year, Singapore's SEAVI Advent closed a $178 million diversified buyout fund.
Preqin says there are now at least 10 PE funds trying to raise capital towards themes that include cleantech, of which four are dedicated, as mentioned above. Together these 10 seek to raise up to $3.6 billion, with the four dedicated funds accounting for $1.4 billion of that.
Preqin has released a report on cleantech funds that shows huge interest among institutional investors and funds of funds. Despite the global financial crisis, overall cleantech fundraising remained steady in 2008, with 29 funds raising a total of $6 billion worldwide, roughly the same as was raised in 2007. The majority has gone to VC funds, with infrastructure funds also playing a big role.
In North America, funds this year seek to raise up to $9 billion, making this the biggest market, followed by European funds, which want to raise over $7 billion, Preqin says.
The consultants also find more than half of cleantech-focused VC firms prefer to take minority stakes, while buyout and infrastructure firms mostly prefer controlling stakes. For institutional investors, these funds represent the preferred means of accessing cleantech themes, as opposed to via the public markets, because the sector is too new to be well represented in the listed space.
Saturday, July 11, 2009
Interesting presentation on evaluating Cleantech
http://www.slideshare.net/normanj/cleantech-technonology-evaluation-and-assessment?nocache=3934
Cleantech could top venture capital within five years, NVCA exec says Clean tech drawing more investment
By CAMILLE RICKETTS, VentureBeat
Posted: Apr. 10, 2009
SILICON VALLEY — Cleantech could be the largest area for venture capital investment within five years if not sooner, Mark Heesen, president of the National Venture Capital Association, told VentureBeat in an interview. The NVCA has been bullish on cleantech for several years now, but the stars do seem to be aligning in new, momentous ways.
The trade group recently released a report showing that cleantech investing had spiked 54 percent to $4.1 billion between 2007 and 2008, up from $444 million in 2004 when the sector first started to gain momentum. With the administration and economic stimulus bill adding new weight and urgency to green initiatives like smart grid development, renewable energy innovation and demand-side management, startups and VCs alike are jockeying for position like never before.
“This is an area that’s ripe for investment — we’re going to be seeing the next eBay, the next Google coming out of the cleantech sector,” Heesen said. “It’s significant that we’re seeing the government propping up these industries at the expense of other industries. It is definitely saving a range of cleantech companies that would have gone under otherwise.”
Not to say that there won’t be losses now — with every emerging business segment there is inevitable risk, Heesen acknowledged. Just look at the cuts made by once formidable Solar players like Ausra and OptiSolar, or the frozen over market for green IPOs. But with federal support, and the hothouse focus of bigwig firms like Kleiner Perkins Caufield & Byers (Bloom Energy, Fisker Automotive, Lilliputian Systems) and Khosla Ventures (Amyris, Great Point Energy, PVT Solar) coddling green tech startups, there will be room and impetus for growth for years down the line. Good money will beget good talent — particularly following recession-spurred personnel shakeups — and the cycle will repeat (at least that’s the prediction).
Yes, many firms and startups were shaken after Q1 reports showed cleantech funding taking a 41 percent nosedive since last year. The conspicuous absence of any investment round topping $100 million was not only unusual, but legitimately daunting. Even so, consensus is that stimulus funds and the energy bill should turn this around. Even before money has changed hands, the optimism in cleantech bubbles in Silicon Valley and elsewhere has attracted VC dollars on its own (see: Prism Solar’s $150 million, Fisker’s $85 million) — setting the sector back on track to fulfill Heesen’s five-year statement.
Posted: Apr. 10, 2009
SILICON VALLEY — Cleantech could be the largest area for venture capital investment within five years if not sooner, Mark Heesen, president of the National Venture Capital Association, told VentureBeat in an interview. The NVCA has been bullish on cleantech for several years now, but the stars do seem to be aligning in new, momentous ways.
The trade group recently released a report showing that cleantech investing had spiked 54 percent to $4.1 billion between 2007 and 2008, up from $444 million in 2004 when the sector first started to gain momentum. With the administration and economic stimulus bill adding new weight and urgency to green initiatives like smart grid development, renewable energy innovation and demand-side management, startups and VCs alike are jockeying for position like never before.
“This is an area that’s ripe for investment — we’re going to be seeing the next eBay, the next Google coming out of the cleantech sector,” Heesen said. “It’s significant that we’re seeing the government propping up these industries at the expense of other industries. It is definitely saving a range of cleantech companies that would have gone under otherwise.”
Not to say that there won’t be losses now — with every emerging business segment there is inevitable risk, Heesen acknowledged. Just look at the cuts made by once formidable Solar players like Ausra and OptiSolar, or the frozen over market for green IPOs. But with federal support, and the hothouse focus of bigwig firms like Kleiner Perkins Caufield & Byers (Bloom Energy, Fisker Automotive, Lilliputian Systems) and Khosla Ventures (Amyris, Great Point Energy, PVT Solar) coddling green tech startups, there will be room and impetus for growth for years down the line. Good money will beget good talent — particularly following recession-spurred personnel shakeups — and the cycle will repeat (at least that’s the prediction).
Yes, many firms and startups were shaken after Q1 reports showed cleantech funding taking a 41 percent nosedive since last year. The conspicuous absence of any investment round topping $100 million was not only unusual, but legitimately daunting. Even so, consensus is that stimulus funds and the energy bill should turn this around. Even before money has changed hands, the optimism in cleantech bubbles in Silicon Valley and elsewhere has attracted VC dollars on its own (see: Prism Solar’s $150 million, Fisker’s $85 million) — setting the sector back on track to fulfill Heesen’s five-year statement.
http://www.greentechmedia.com/cleantech-investing/post/defenestrate-your-assumptions/
Defenestrate your assumptions
If one is to go by what cleantech VCs are saying these days, it seems like we're at a time where some of the core assumptions and current patterns in cleantech venture capital might be about to see some changes.
This is all within the context of VCs generally agreeing that cleantech is going to see continued interest and investments going forward (note: pdf), of course. But the colleagues I speak with will often refer to some key challenges facing the sector's status quo:
1. The venture model is (kinda) broken, across all sectors. Lots of people say this phrase, but they all tend to mean different things by it. In general, however, there's a growing recognition that in the overall venture capital industry the big funds are getting too big, the returns have been too low, the valuations have risen as too much money floods in, and true company-building skills have fallen away in favor of attempts to simply harvest already well-established opportunities.
2. We're still waiting on the big exits in cleantech. To be clear, there have definitely been some big cleantech success stories and there has been an increasing pattern of exits overall, but we have yet to see the big "make the fund" type of exit that would justify the kind of dollars that have been thrown at certain opportunities (ahem, solar, ahem). There are plenty of good excuses for this, including the lack of an IPO window, the overall economy, and the fact that the major investment activity has only taken place over the last few years. But lacking success stories, VCs lack good examples of what works in the sector. And so many of the most ardently-felt and -stated opinions about investment models (ones that become conventional wisdom and accepted at face value by journalists and others) remain very untested.
3. There are too many VC firms in general, and too many inexperienced teams throwing themselves at cleantech in particular. That sounds more disparaging than I mean it to be -- I've met with many first-time teams that have very smart ideas and good backgrounds outside of cleantech venture capital. Some will end up being the engines of the new creative thinking that we might be about to see in the sector. But the fact remains that there are well over 100 venture capital firms that are focused only on cleantech venture capital, and then another couple of hundred that want to put money into the sector along with other venture sectors. They can't all thrive, and in fact many won't survive their initial fundraising efforts. But the number of these firms running around meeting with companies, with LPs, etc. is dizzying. And yet at the same time, actual experience (much less track records) in cleantech venture capital remains tough to find.
4. It's become conventional wisdom that the sector should focus on "growth stage" investments (although different investors have different ideas about what exactly that means). On paper, at least, it appears to be the stage where the risk/rewards and the timeframe to exit fit best with the returns hopes of these investors. However, as per point #2 above, it's completely uncertain that the exit multiples in industries like energy and water (where the market prices are often affected by the availability of multiple alternative solutions to what is essentially the production of basic commodities like kwh and drinking water) will be as healthy as these investors expect, since we haven't seen many such exits yet. And the sheer volumes of capital being directed into this stage means that, in order to win these deals, many of these investors will likely end up overpaying for the opportunity. It may seem less risky on paper, but the capital supply and demand dynamics in growth stage cleantech venture capital means that the efficacy of that kind of a stage focus is very much an open question. Yet in general, according to the NVCA survey linked above, many more VCs expect to be shifting later rather than earlier over time.
5. There remain some pretty major underserved "gaps" in the marketplace. A) There's a gap at the seed stage, in subsectors within cleantech where the gestation period of an innovation is going to take longer to bring to market than typically meets the timeframes of even "early stage" cleantech investors. B) There's a gap in "first of a kind" and "second of a kind", etc., project finance -- financing the build-out of a CIGS solar manufacturing facility, for instance. VCs have done some of this, but it costs a lot and they're reticent to keep paying for steel in the ground. Government dollars are helping to address this, but it remains (as always) a slow and uncertain source of such capital. C) There's a gap in all of the non-proprietary-technology parts of clean energy and water markets. Much of the business opportunity from any "clean energy revolution" (as some have termed it) will actually be captured by service players like specialized installers, consultants, outsourced service providers, etc. But these types of businesses really don't fit the typical venture model, because it's tough to see huge exit multiples and tough to see how they scale quickly enough to provide 10x returns for VCs. Yet they will make money as businesses, even if they won't do it in the specific model that VCs will look for.
What's the answer to all of the above? To be determined, stay tuned. But these are the kinds of challenges that I hear about from my fellow investors in the space, and these investors are often talking about this being a time to be innovative about investment models, investment structures, and the like.
Of course, VCs are infamous for not really putting their money where their mouths are when it comes to changing the traditional VC model. So we'll have to see if anything actually happens. But if there's ever to be innovative new approaches that could change the way our industry does things, now would be the time.
Defenestrate your assumptions
If one is to go by what cleantech VCs are saying these days, it seems like we're at a time where some of the core assumptions and current patterns in cleantech venture capital might be about to see some changes.
This is all within the context of VCs generally agreeing that cleantech is going to see continued interest and investments going forward (note: pdf), of course. But the colleagues I speak with will often refer to some key challenges facing the sector's status quo:
1. The venture model is (kinda) broken, across all sectors. Lots of people say this phrase, but they all tend to mean different things by it. In general, however, there's a growing recognition that in the overall venture capital industry the big funds are getting too big, the returns have been too low, the valuations have risen as too much money floods in, and true company-building skills have fallen away in favor of attempts to simply harvest already well-established opportunities.
2. We're still waiting on the big exits in cleantech. To be clear, there have definitely been some big cleantech success stories and there has been an increasing pattern of exits overall, but we have yet to see the big "make the fund" type of exit that would justify the kind of dollars that have been thrown at certain opportunities (ahem, solar, ahem). There are plenty of good excuses for this, including the lack of an IPO window, the overall economy, and the fact that the major investment activity has only taken place over the last few years. But lacking success stories, VCs lack good examples of what works in the sector. And so many of the most ardently-felt and -stated opinions about investment models (ones that become conventional wisdom and accepted at face value by journalists and others) remain very untested.
3. There are too many VC firms in general, and too many inexperienced teams throwing themselves at cleantech in particular. That sounds more disparaging than I mean it to be -- I've met with many first-time teams that have very smart ideas and good backgrounds outside of cleantech venture capital. Some will end up being the engines of the new creative thinking that we might be about to see in the sector. But the fact remains that there are well over 100 venture capital firms that are focused only on cleantech venture capital, and then another couple of hundred that want to put money into the sector along with other venture sectors. They can't all thrive, and in fact many won't survive their initial fundraising efforts. But the number of these firms running around meeting with companies, with LPs, etc. is dizzying. And yet at the same time, actual experience (much less track records) in cleantech venture capital remains tough to find.
4. It's become conventional wisdom that the sector should focus on "growth stage" investments (although different investors have different ideas about what exactly that means). On paper, at least, it appears to be the stage where the risk/rewards and the timeframe to exit fit best with the returns hopes of these investors. However, as per point #2 above, it's completely uncertain that the exit multiples in industries like energy and water (where the market prices are often affected by the availability of multiple alternative solutions to what is essentially the production of basic commodities like kwh and drinking water) will be as healthy as these investors expect, since we haven't seen many such exits yet. And the sheer volumes of capital being directed into this stage means that, in order to win these deals, many of these investors will likely end up overpaying for the opportunity. It may seem less risky on paper, but the capital supply and demand dynamics in growth stage cleantech venture capital means that the efficacy of that kind of a stage focus is very much an open question. Yet in general, according to the NVCA survey linked above, many more VCs expect to be shifting later rather than earlier over time.
5. There remain some pretty major underserved "gaps" in the marketplace. A) There's a gap at the seed stage, in subsectors within cleantech where the gestation period of an innovation is going to take longer to bring to market than typically meets the timeframes of even "early stage" cleantech investors. B) There's a gap in "first of a kind" and "second of a kind", etc., project finance -- financing the build-out of a CIGS solar manufacturing facility, for instance. VCs have done some of this, but it costs a lot and they're reticent to keep paying for steel in the ground. Government dollars are helping to address this, but it remains (as always) a slow and uncertain source of such capital. C) There's a gap in all of the non-proprietary-technology parts of clean energy and water markets. Much of the business opportunity from any "clean energy revolution" (as some have termed it) will actually be captured by service players like specialized installers, consultants, outsourced service providers, etc. But these types of businesses really don't fit the typical venture model, because it's tough to see huge exit multiples and tough to see how they scale quickly enough to provide 10x returns for VCs. Yet they will make money as businesses, even if they won't do it in the specific model that VCs will look for.
What's the answer to all of the above? To be determined, stay tuned. But these are the kinds of challenges that I hear about from my fellow investors in the space, and these investors are often talking about this being a time to be innovative about investment models, investment structures, and the like.
Of course, VCs are infamous for not really putting their money where their mouths are when it comes to changing the traditional VC model. So we'll have to see if anything actually happens. But if there's ever to be innovative new approaches that could change the way our industry does things, now would be the time.
Rules of Cleantech
http://www.cleantechblog.com/2009/07/rules-in-cleantech.html
Here is our version of the Rules:
1. Energy is slow and big - Energy technology R&D and commercialization time frames are longer and costs higher
2. Technology is “cheap”, the scale up is where all the risk is
3. There is no disruptive technology in energy, only disruptive policies and resource shocks that make certain technologies look disruptive after the fact - aka, "it's the policies (and subsidies), stupid"
4. At scale, there is no capital efficient investing in energy
5. Commodity prices and policy tend to be more important variables than technology and management
6. Energy is at heart a resource play, the price you pay matters more than what you do with the resource
As a result we've worked out a strategic playbook:
1. Look for mature technologies - if it's not 10 year old technology, don't touch it.
Limit scale up risk and look for technology with few dependencies for scale
2. Embrace policy - solid policy frameworks are much better bets than great technologies. In fact, most of the serious money in cleantech has been made by being in the right place when the policies or subsidies hit critical mass, not by developing technologies after the fact.
3. Expect lower exit multiples, and target lower burn rates over a longer commercialization time as a result
4. Discipline wins. Think Stage Gate and SPC instead of venture style “massively parallel” R&D commercialization strategies
5. Don’t be afraid to play a diversified investment strategy
6. Don’t ignore Acquisition & Development as a viable growth strategy
7. Don’t be afraid of good low tech deals, that's where many the cleantech hits have been (if we haven't heard "that's not a venture bet" 3 times, we tend to stay away.)
8. “Powder dry approach” - deploy limited capital early on for larger stakes and focus on returning capital quickly, not rapidly deploying capital
9. Secure vastly superior market intelligence before moving - stealth is pretty much a worthless strategy, you're too likely to miss key things that way.
And I thought I'd share a few paraphrased quotes told to me over the years that have helped bring these thoughts home:
A former boss, now an executive at a major utility - "the only thing that matters to the bottom line of the company are the rate cases in front of us. Nothing else we can do with customers, finance, or technology will make a difference if those don't go well."
A former head of oil company venture fund on why it takes so long to get technology into the energy sector - "we figure we are taking enough risk just letting a vendor touch our $1 billion platform."
My father in law, a long time refinery engineer and manager on what small scale means in energy - "let me take you on a refinery tour during a turnaround sometime and show you what half a billion looks like lying on the ground." Corollary, "you can't do anything serious at a refinery for less than $100 mm."
Electrochemist and long time fuel cell researcher on the challenges of making a FC last - "if you could perfectly control humidity and temperature, a PEMFC will run forever." He was pointing out that it's much easier said than done.
Here is our version of the Rules:
1. Energy is slow and big - Energy technology R&D and commercialization time frames are longer and costs higher
2. Technology is “cheap”, the scale up is where all the risk is
3. There is no disruptive technology in energy, only disruptive policies and resource shocks that make certain technologies look disruptive after the fact - aka, "it's the policies (and subsidies), stupid"
4. At scale, there is no capital efficient investing in energy
5. Commodity prices and policy tend to be more important variables than technology and management
6. Energy is at heart a resource play, the price you pay matters more than what you do with the resource
As a result we've worked out a strategic playbook:
1. Look for mature technologies - if it's not 10 year old technology, don't touch it.
Limit scale up risk and look for technology with few dependencies for scale
2. Embrace policy - solid policy frameworks are much better bets than great technologies. In fact, most of the serious money in cleantech has been made by being in the right place when the policies or subsidies hit critical mass, not by developing technologies after the fact.
3. Expect lower exit multiples, and target lower burn rates over a longer commercialization time as a result
4. Discipline wins. Think Stage Gate and SPC instead of venture style “massively parallel” R&D commercialization strategies
5. Don’t be afraid to play a diversified investment strategy
6. Don’t ignore Acquisition & Development as a viable growth strategy
7. Don’t be afraid of good low tech deals, that's where many the cleantech hits have been (if we haven't heard "that's not a venture bet" 3 times, we tend to stay away.)
8. “Powder dry approach” - deploy limited capital early on for larger stakes and focus on returning capital quickly, not rapidly deploying capital
9. Secure vastly superior market intelligence before moving - stealth is pretty much a worthless strategy, you're too likely to miss key things that way.
And I thought I'd share a few paraphrased quotes told to me over the years that have helped bring these thoughts home:
A former boss, now an executive at a major utility - "the only thing that matters to the bottom line of the company are the rate cases in front of us. Nothing else we can do with customers, finance, or technology will make a difference if those don't go well."
A former head of oil company venture fund on why it takes so long to get technology into the energy sector - "we figure we are taking enough risk just letting a vendor touch our $1 billion platform."
My father in law, a long time refinery engineer and manager on what small scale means in energy - "let me take you on a refinery tour during a turnaround sometime and show you what half a billion looks like lying on the ground." Corollary, "you can't do anything serious at a refinery for less than $100 mm."
Electrochemist and long time fuel cell researcher on the challenges of making a FC last - "if you could perfectly control humidity and temperature, a PEMFC will run forever." He was pointing out that it's much easier said than done.
Taken from http://www.venturecompany.com/opinions/files/stung_by_subprime.html
Here is how entrepreneurs can recognize a sting from subprime VC:
Step 1: We like the idea, but before we invest please finish the product some more, then come back
Step 2: 6 Months later, you finished the product. Great, now prove it works by getting 100,000 daily users, then come back
Step 3: Fantastic, now we'll take 60% of your company for $1M
Ouch, that hurts.
Here is why sub-prime tactics hurt our innovative ecosystem, just like sub-prime lendings have a negative effect on the housing market as a whole.
ad 1/ Technology development is the investment risk we understand quite well, timely applicability to a market is the real issue. So, proving that the entrepreneur can build a product can easily be derived from the entrepreneur's vision, knowledge and credentials in that space, juiced up with some kitchen-sink prototyping. On top of that a 6-month self-funded development timeframe with 2-3 developers can hardly yield a sustainable competitive advantage anyway, so R&D development proves nothing.
ad 2/ In many cases it is impossible to land 100,000 users before you have a critical mass of product capabilities. That critical mass comes from an R&D investment that generates substantial differentiation, and rarely from tip-toeing into the marketplace. Marketplaces, for example, only grow when a critical mass of both supply and demand are lured in and participate, which often requires a bolstering of technology to support all constituents, rather than minimizing it. Already, too many technology products enter the market unfinished as a result of underfunding and yield false negatives.
ad 3/ Control and valuation of the company are a direct indication of the future success of an early-stage company. The vast majority of technology success stories are derived from retained majority control by its founders and CEO (Facebook, Google, Twitter, eBay etc). Investors are terrible operators (no surprise given their background and experience) and should not want to own a majority stake in their companies, simply out of self-preservation.
The only early-stage investors who may be able to turn sub-prime deals into prime are the investors who:
- have proven to be successful operators themselves
- support the vision before the product is there
- have great syndicates to support the full runway of a disruptive market entry going forward.
Here is how entrepreneurs can recognize a sting from subprime VC:
Step 1: We like the idea, but before we invest please finish the product some more, then come back
Step 2: 6 Months later, you finished the product. Great, now prove it works by getting 100,000 daily users, then come back
Step 3: Fantastic, now we'll take 60% of your company for $1M
Ouch, that hurts.
Here is why sub-prime tactics hurt our innovative ecosystem, just like sub-prime lendings have a negative effect on the housing market as a whole.
ad 1/ Technology development is the investment risk we understand quite well, timely applicability to a market is the real issue. So, proving that the entrepreneur can build a product can easily be derived from the entrepreneur's vision, knowledge and credentials in that space, juiced up with some kitchen-sink prototyping. On top of that a 6-month self-funded development timeframe with 2-3 developers can hardly yield a sustainable competitive advantage anyway, so R&D development proves nothing.
ad 2/ In many cases it is impossible to land 100,000 users before you have a critical mass of product capabilities. That critical mass comes from an R&D investment that generates substantial differentiation, and rarely from tip-toeing into the marketplace. Marketplaces, for example, only grow when a critical mass of both supply and demand are lured in and participate, which often requires a bolstering of technology to support all constituents, rather than minimizing it. Already, too many technology products enter the market unfinished as a result of underfunding and yield false negatives.
ad 3/ Control and valuation of the company are a direct indication of the future success of an early-stage company. The vast majority of technology success stories are derived from retained majority control by its founders and CEO (Facebook, Google, Twitter, eBay etc). Investors are terrible operators (no surprise given their background and experience) and should not want to own a majority stake in their companies, simply out of self-preservation.
The only early-stage investors who may be able to turn sub-prime deals into prime are the investors who:
- have proven to be successful operators themselves
- support the vision before the product is there
- have great syndicates to support the full runway of a disruptive market entry going forward.
I once attended a full day conference by Amory Lovins where I listened to his jokes 4 times in a row.
Anyway, this guy is really something else and is probably the greatest advocator for energy efficiency in the US. Here's some interesting career advice, and coincidentally, quite similar the advice of taking up psychology my father always tells me to do:
"Students who are interested in CleanTech should have some scientific or engineering knowledge and some economic acumen, but they should also study social sciences, like culture and anthropology.
If you continue to pursue learning , Lovins said, “you’ll learn early that you can learn more in 6 months than most people know about just about anything,” and this holds particularly true in this very dynamic moment in history.
Once you are in the field, you just need to take advantage of individual people’s knowledge and - tap it."
Anyway, this guy is really something else and is probably the greatest advocator for energy efficiency in the US. Here's some interesting career advice, and coincidentally, quite similar the advice of taking up psychology my father always tells me to do:
"Students who are interested in CleanTech should have some scientific or engineering knowledge and some economic acumen, but they should also study social sciences, like culture and anthropology.
If you continue to pursue learning , Lovins said, “you’ll learn early that you can learn more in 6 months than most people know about just about anything,” and this holds particularly true in this very dynamic moment in history.
Once you are in the field, you just need to take advantage of individual people’s knowledge and - tap it."
Presentation Tips
Less is more.
You have lots to tell - you are brimming with enthusiasm - you want to pack all your information into a very short period of time. The problem is that too much information can be a real turn off. Simplify your message and your audience will be able to understand it.
Every picture tells a story.
Most corporate presentations are packed with bullet points. The problem is that bullet points are a very inefficient way of telling a story. In a presentation 55% of the way that we take in information is visual compared with only 7% for text (bullet points). If you use images to tell your story then you will have an immediate competitive advantage. And if you are wondering about the other 38% this is for vocal delivery.
Don't go it alone.
Resist the urge to do it all yourself. We can all use PowerPoint for putting together an ad-hoc presentation, but a corporate presentation deserves better. Best to bite the bullet (if you'll excuse the pun) and bring in a professional presentation design agency.
Dress for success.
You wouldn't present wearing a shell suit - so make sure that you are dressed correctly. Generally speaking it is better to dress on the smart side. You could also read our article about What to wear.
"Life is a stage and we are just players on it".
When we go up to present we put ourselves on display. The audience will be looking at us - often in intense detail. Ensure that you have covered off the finer points - hair brushed, shoes cleaned, clothes ironed, nails cleaned and clipped.
Winging it.
It is so easy not to prepare. There are never enough hours in the day - and besides all the best speakers can just stand up and give a great speech. The problem is that they have had years of preparation. The sad truth is that as with most things in life you take short cuts at your peril. Rehearse & you will get better.
You have lots to tell - you are brimming with enthusiasm - you want to pack all your information into a very short period of time. The problem is that too much information can be a real turn off. Simplify your message and your audience will be able to understand it.
Every picture tells a story.
Most corporate presentations are packed with bullet points. The problem is that bullet points are a very inefficient way of telling a story. In a presentation 55% of the way that we take in information is visual compared with only 7% for text (bullet points). If you use images to tell your story then you will have an immediate competitive advantage. And if you are wondering about the other 38% this is for vocal delivery.
Don't go it alone.
Resist the urge to do it all yourself. We can all use PowerPoint for putting together an ad-hoc presentation, but a corporate presentation deserves better. Best to bite the bullet (if you'll excuse the pun) and bring in a professional presentation design agency.
Dress for success.
You wouldn't present wearing a shell suit - so make sure that you are dressed correctly. Generally speaking it is better to dress on the smart side. You could also read our article about What to wear.
"Life is a stage and we are just players on it".
When we go up to present we put ourselves on display. The audience will be looking at us - often in intense detail. Ensure that you have covered off the finer points - hair brushed, shoes cleaned, clothes ironed, nails cleaned and clipped.
Winging it.
It is so easy not to prepare. There are never enough hours in the day - and besides all the best speakers can just stand up and give a great speech. The problem is that they have had years of preparation. The sad truth is that as with most things in life you take short cuts at your peril. Rehearse & you will get better.
Portfolio Update 07/11/09
Investing Period June 1st to July 11th
Portfolio Performance to Date = 4.25%
XIRR = 20% (for a period of 2 months)
Lessons Learn
Portfolio management
1. This marks 2 months of Investing (started on May 12)
2. Etrade Now upgraded to 9.99 per trade. Differences between Absolute Profit lose and with commission getting lesser.
3. 3 stocks instead of 4 stocks seems to be doing better.
Buying
4. Buying only on breakout and on strong reversal seems to be a good strategy.
5. Have to stop buying stocks when it has increased too fast up.
6. Buy stocks on the "bullish accumulation trend", where there is a previous period of strong accumulation. (Riding the wave!)
7. Dont pay a premium for stocks that are too illiquid.
Selling
8. Still do not know the best time to sell stocks. For now, just stick to +20%, or when -8%.
9. Sell stocks on strong weakness and/or distribution
Portfolio Performance to Date = 4.25%
XIRR = 20% (for a period of 2 months)
Lessons Learn
Portfolio management
1. This marks 2 months of Investing (started on May 12)
2. Etrade Now upgraded to 9.99 per trade. Differences between Absolute Profit lose and with commission getting lesser.
3. 3 stocks instead of 4 stocks seems to be doing better.
Buying
4. Buying only on breakout and on strong reversal seems to be a good strategy.
5. Have to stop buying stocks when it has increased too fast up.
6. Buy stocks on the "bullish accumulation trend", where there is a previous period of strong accumulation. (Riding the wave!)
7. Dont pay a premium for stocks that are too illiquid.
Selling
8. Still do not know the best time to sell stocks. For now, just stick to +20%, or when -8%.
9. Sell stocks on strong weakness and/or distribution
Tuesday, June 23, 2009
google invested 3.9M in one of the startups founded by one of Google's Founder's Wife
http://blogs.zdnet.com/BTL/?p=5123
Google said today in an SEC filing that it has invested $3.9 million in 23andMe, a biotech startup that’s focused on allowing consumers to search their genome.
23andMe just closed its series A round of funding. The startup’s funding round included Google, New Enterprise Associates, Mohr Davidow Ventures and Genentech. 23andMe says it is “focused on empowering individuals to access, explore, share and better understand their genetic information, making use of recent advances in DNA analysis technologies and proprietary web-based software tools.”
In its filing, Google also noted that Anne Wojcicki is a co-founder of 23andMe and is a member of the board of directors. Wojcicki is married to Sergey Brin, Google’s president of technology and company co-founder.
HP: Brings new meaning the the term:" Financial Affinity "
Google said today in an SEC filing that it has invested $3.9 million in 23andMe, a biotech startup that’s focused on allowing consumers to search their genome.
23andMe just closed its series A round of funding. The startup’s funding round included Google, New Enterprise Associates, Mohr Davidow Ventures and Genentech. 23andMe says it is “focused on empowering individuals to access, explore, share and better understand their genetic information, making use of recent advances in DNA analysis technologies and proprietary web-based software tools.”
In its filing, Google also noted that Anne Wojcicki is a co-founder of 23andMe and is a member of the board of directors. Wojcicki is married to Sergey Brin, Google’s president of technology and company co-founder.
HP: Brings new meaning the the term:" Financial Affinity "
Monday, June 22, 2009
Some Insights from the Cleantech Innovation Forum in London, at Kensington Olympia
http://www.renewableenergyjobs.com/greenleader/uk/last-week%E2%80%99s-cleantech-innovation-forum/
1. (In the UK) VCs no longer want to finance seed round cleantech companies, but that only angels are investing
2. Investors are becoming too reliant on copious amounts of data at the expense of gut feel, in order to de-risk the investment, which can also end up making the process overly lengthy and costly.
(HP: This will always be the case, highly dependent on each firm's "nature".
3. Investors who remain active are people who understand the market and technologies, while those who are less focussed on cleantech have fallen off the bandwagon.
(HP: Survival of the fittest!! Other articles/observations have noted how some VCs/investors really have limited technical/market experience in Cleantech)
4. The fundraising team (of clean tech companies) has more and more creative and interesting people that will work without a salary, for equity alone.
(HP: This is very very surprising... especially in cleantech where the returns or time taken to reach neutral cash flow is quite lengthy and riskly as compared to some other types of investments.
1. (In the UK) VCs no longer want to finance seed round cleantech companies, but that only angels are investing
2. Investors are becoming too reliant on copious amounts of data at the expense of gut feel, in order to de-risk the investment, which can also end up making the process overly lengthy and costly.
(HP: This will always be the case, highly dependent on each firm's "nature".
3. Investors who remain active are people who understand the market and technologies, while those who are less focussed on cleantech have fallen off the bandwagon.
(HP: Survival of the fittest!! Other articles/observations have noted how some VCs/investors really have limited technical/market experience in Cleantech)
4. The fundraising team (of clean tech companies) has more and more creative and interesting people that will work without a salary, for equity alone.
(HP: This is very very surprising... especially in cleantech where the returns or time taken to reach neutral cash flow is quite lengthy and riskly as compared to some other types of investments.
Now is the not the time to retreat from green tech
http://www.mercurynews.com/ci_12573115?source=rss
(report regarding investment and jobs in America's Clean Tech Sector)
1. The Pew Charitable Trusts delivered an evenhanded report last week that examines in detail the impact on jobs this industry has had in just a short time.
2. The report finds that from 1998 to 2007, the cleantech industry accounted for 770,000 new jobs. While that may sound tiny in a U.S. economy with 140 million jobs, it
already is more than the biotechnology sector (200,000) and gaining on employment in the traditional energy sector (1.27 million).
3. Green-tech jobs grew by 9.1 percent, compared with only 3.7 percent for overall job growth.
4. (From the Report) "Policymakers, business leaders and the public need credible, reliable data to ground their policy deliberations and choices, and to understand where emerging economic opportunities lie. They also need a clear, concrete and common definition of what constitutes the clean-energy economy so they can track jobs and businesses and gauge the effectiveness of public policy choices and investments."
(report regarding investment and jobs in America's Clean Tech Sector)
1. The Pew Charitable Trusts delivered an evenhanded report last week that examines in detail the impact on jobs this industry has had in just a short time.
2. The report finds that from 1998 to 2007, the cleantech industry accounted for 770,000 new jobs. While that may sound tiny in a U.S. economy with 140 million jobs, it
already is more than the biotechnology sector (200,000) and gaining on employment in the traditional energy sector (1.27 million).
3. Green-tech jobs grew by 9.1 percent, compared with only 3.7 percent for overall job growth.
4. (From the Report) "Policymakers, business leaders and the public need credible, reliable data to ground their policy deliberations and choices, and to understand where emerging economic opportunities lie. They also need a clear, concrete and common definition of what constitutes the clean-energy economy so they can track jobs and businesses and gauge the effectiveness of public policy choices and investments."
Survey: Venture capital firms look outside U.S.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/10/BUKK183OLV.DTL&type=tech
Survey Results from 725 VCs around the world
1. Only 17 percent of venture capitalists expect to increase their investments in the United States over the next three years.
2. The biggest beneficiary of this trend is Asia, followed by India, South America, Europe and the United Kingdom.
3. While the U.S. economy is shrinking, the economies of China and India are still growing, although more slowly, so startups that sell to those markets can still thrive
4. Clean technology is expected to become the leading area for investment, followed by medical devices, new media and social networks, consumer business, biopharma and software.
5. The venture industry will be forced to contract to the way it was before the dot-com bubble, with one- or two-person firms raising smaller funds and investing in a few niche sectors.
Seems like exciting times ahead for the position I'm currently in :)
Survey Results from 725 VCs around the world
1. Only 17 percent of venture capitalists expect to increase their investments in the United States over the next three years.
2. The biggest beneficiary of this trend is Asia, followed by India, South America, Europe and the United Kingdom.
3. While the U.S. economy is shrinking, the economies of China and India are still growing, although more slowly, so startups that sell to those markets can still thrive
4. Clean technology is expected to become the leading area for investment, followed by medical devices, new media and social networks, consumer business, biopharma and software.
5. The venture industry will be forced to contract to the way it was before the dot-com bubble, with one- or two-person firms raising smaller funds and investing in a few niche sectors.
Seems like exciting times ahead for the position I'm currently in :)
Nuggets of Wisdom from a VC
I happened to stumble upon the random musings of a VC regarding pitching - his account was short but so very true. Credit goes to http://www.j-lp.com/blog/index.html
Title: You Lose Credibility when you pitch
Claim that there is no competition.
Use percentage math to justify the investment.
Have misspelled words in your documents.
Are not aware of the local environment.
Ask for too much.
Ask for too little.
Are unaware of the entire process of building a team or company.
Look at the next milestone as the finish line.
Title: You Lose Credibility when you pitch
Claim that there is no competition.
Use percentage math to justify the investment.
Have misspelled words in your documents.
Are not aware of the local environment.
Ask for too much.
Ask for too little.
Are unaware of the entire process of building a team or company.
Look at the next milestone as the finish line.
Sunday, June 21, 2009
Entrepreneurship Discussions
I had a wonderful time on the 13th of June. The iLEADers(Batch 3) had an morning discussion with Mr Rahul Harkawat and Ms Ann Burgraff-Rowell, both seasoned business professionals who have experience in entrepreneurship in Silicon Valley. Below are some interesting excepts:
Mr Rahul - A serious no-nonsense serial entrepreneur who started out with USD5 in his pocket when arriving in America. Very determined and persistent person.
1. Kept on stressing the 3 important criteria for being a successful entrepreneur - Persistence, Personal skills (network and social capital), and Credibility.
2. Persistence: Due to the nature of start-up companies, one will be facing hurdles and difficulties that has no precedent (i.e. little case study and benchmarks). You'll also be like David fighting the Goliath - you need to strongly believe in yourself when everything doesnt go your way.
3. Personal - He listed numerous examples whereby having personal connection saved him and his company from the many pitfalls he faced while being an entrepreneur.
4. Credibility - Once, even without a company or a business model, he just walked straight right into Disney and offered to service their graphical computers at a steep discount over their existing systems. He made sure that he kept to his promise and Disney became his first customer, allowing him to start-up his company.
Ms Ann Burgraff-Rowell - In contrast to Rahul, Ann was a very lively and attractive American was very willing to share her experiences through very vivid anecdotes. She held key positions in marketing for many different start-ups
1. She gave many examples of guerrilla marketing (using high school students) and gave some examples of how to bootstrap.
2. She told many stories on the culture of SV ( Google Massager earning millions through stock options, vocal and accepting attitude even towards interns etc...)
3. She managed to shed some light on how families and couple relationships intertwine with being an entreperneur.
We later went on to BuzzCity - one of the very old business in new media who focuses on mobile advertising platform. Managed to have a very frank talk with the boss who was very willing to share his business model and experience.
Mr Rahul - A serious no-nonsense serial entrepreneur who started out with USD5 in his pocket when arriving in America. Very determined and persistent person.
1. Kept on stressing the 3 important criteria for being a successful entrepreneur - Persistence, Personal skills (network and social capital), and Credibility.
2. Persistence: Due to the nature of start-up companies, one will be facing hurdles and difficulties that has no precedent (i.e. little case study and benchmarks). You'll also be like David fighting the Goliath - you need to strongly believe in yourself when everything doesnt go your way.
3. Personal - He listed numerous examples whereby having personal connection saved him and his company from the many pitfalls he faced while being an entrepreneur.
4. Credibility - Once, even without a company or a business model, he just walked straight right into Disney and offered to service their graphical computers at a steep discount over their existing systems. He made sure that he kept to his promise and Disney became his first customer, allowing him to start-up his company.
Ms Ann Burgraff-Rowell - In contrast to Rahul, Ann was a very lively and attractive American was very willing to share her experiences through very vivid anecdotes. She held key positions in marketing for many different start-ups
1. She gave many examples of guerrilla marketing (using high school students) and gave some examples of how to bootstrap.
2. She told many stories on the culture of SV ( Google Massager earning millions through stock options, vocal and accepting attitude even towards interns etc...)
3. She managed to shed some light on how families and couple relationships intertwine with being an entreperneur.
We later went on to BuzzCity - one of the very old business in new media who focuses on mobile advertising platform. Managed to have a very frank talk with the boss who was very willing to share his business model and experience.
Wednesday, June 17, 2009
Markets have been bleeding the last two days. Stocks have been freefalling. Invested in two stocks that could have a quick turnaround in this apparent downtrend.
MR
high volume on long white candle, decreasing volume on decreasing prices.
very thinly traded. less bullish due to the dark cloud cover.
MR
high volume on long white candle, decreasing volume on decreasing prices.
very thinly traded. less bullish due to the dark cloud cover.
| 17-Jun-09 | -2,338.68 |
| 17-Jun-09 | -2,311.40 |
Sunday, May 31, 2009
1st month of Investing!
Monthly Update
12 May 2009 - Buy ERII @ 7.81.
14 May 2009 - Buy TNDM @ 26.7
18 May 2009 - Buy WATG @6.53 28 May 2009 - Sell WATG @ 7.55 (+15.6%)
21 May 2009 - Buy Thor @ 27.30 21 May 2009 - Sell Thor @ 26 (-5.6%)
22 May 2009 - Buy QSII @ 52 29 May 2009 - Sell QSII @ 29 (-5.8%)
28 May 2009 - Buy LFT @ 27.19
29 May 2009 - Buy PEET @ 25.74
Total Trades = 10 Trades. ($20*10 = $200)
Portfolio Performance to Date = -3.79%
XIRR = 0%
Lessons Learnt:
1. Commissions of USD$20 per trade makes a great significance to overall Portfolio Performance.
2. Need to cut down to holding 4 stocks to 3 stocks to focus more on winning stocks.
3. QSII had an earnings announcement on 29th May. The stock fell 15% instantly. Need to put stop Market Sells during any stock's earnings performance
4. WATG was a winning stock. However, got cold feet and sold the stock too fast. Now its up another 21% (from initial point). Need to find out a good selling system. Currently, using a stop market sell @ latest support level.
5. Buy only on breakouts ( cup and handle) or on strong reversal signs. Buyin PEET was in restrospect a rushed order as I didn't like the feeling of letting money doing nothing.
6. Reduced my portfolio to only 30 stocks as I was looking at too many viable stocks at the same time. The important criterias are
- Accelerating Quaterly EPS
- Accelerating Annual EPS
- Institutional <95%>20%
- ROE > 15%
- High RSI.
Lets see how things go with this.
12 May 2009 - Buy ERII @ 7.81.
14 May 2009 - Buy TNDM @ 26.7
18 May 2009 - Buy WATG @6.53 28 May 2009 - Sell WATG @ 7.55 (+15.6%)
21 May 2009 - Buy Thor @ 27.30 21 May 2009 - Sell Thor @ 26 (-5.6%)
22 May 2009 - Buy QSII @ 52 29 May 2009 - Sell QSII @ 29 (-5.8%)
28 May 2009 - Buy LFT @ 27.19
29 May 2009 - Buy PEET @ 25.74
Total Trades = 10 Trades. ($20*10 = $200)
Portfolio Performance to Date = -3.79%
XIRR = 0%
Lessons Learnt:
1. Commissions of USD$20 per trade makes a great significance to overall Portfolio Performance.
2. Need to cut down to holding 4 stocks to 3 stocks to focus more on winning stocks.
3. QSII had an earnings announcement on 29th May. The stock fell 15% instantly. Need to put stop Market Sells during any stock's earnings performance
4. WATG was a winning stock. However, got cold feet and sold the stock too fast. Now its up another 21% (from initial point). Need to find out a good selling system. Currently, using a stop market sell @ latest support level.
5. Buy only on breakouts ( cup and handle) or on strong reversal signs. Buyin PEET was in restrospect a rushed order as I didn't like the feeling of letting money doing nothing.
6. Reduced my portfolio to only 30 stocks as I was looking at too many viable stocks at the same time. The important criterias are
- Accelerating Quaterly EPS
- Accelerating Annual EPS
- Institutional <95%>20%
- ROE > 15%
- High RSI.
Lets see how things go with this.
Wednesday, May 13, 2009
Finally
Finally!! My etrade account is online.
I'm only going to use one method to account for my portfolio performace - IRR.
May 13th - (USD1,347.17)
I'm only going to use one method to account for my portfolio performace - IRR.
May 13th - (USD1,347.17)
Monday, May 11, 2009
http://paul.kedrosky.com/archives/2009/04/vinod_khosla_at.html
Interesting Video.
One interesting quote:
"What we are tending to do is increase technology risk so we can reduce market risk. We will generally take on more market risks, have a bigger jump, and a larger probability of failing at the technology such that when we enter the market we have a larger competitive advantage."
- Vinod Khosla
Assuming that two companies have equivalent risks, but one has more market risk then technology and vice versa, Kholsa would rather invest in the one with technology risk then the one with market risk.
Based on that very statement, I can infer that Kholsa is more a technology person. He's more comfortable with technology, he's a technologist, THAT's why he prefer companies with more technology risks. A salesman, someone very good at doing bulk sales, or a VC who knows market strategy very well, would choose the former.
Individual Judgement determines the perspective of risk. Yet, the inherent risk still exists!
Therefore, investors must always face the contradiction of knowing the company inside out, but have the ability to look at it from a "fresh" perspective.... a skill I'm always trying to achieve.
Another Interesting Nugget!
"One good metric of where there is good innovation potential is to go MIT and Standford and see what's the 1st choice for PHD studies in choosing project."
Hmm interesting metric. Have to test it out somehow by looking at the innovations at these Universities and see how many actually succeed.
Some of the ideas and investment he discussed.. I didnt think were very interesting after doing the maths. Lets see how things turn out lol
Interesting Video.
One interesting quote:
"What we are tending to do is increase technology risk so we can reduce market risk. We will generally take on more market risks, have a bigger jump, and a larger probability of failing at the technology such that when we enter the market we have a larger competitive advantage."
- Vinod Khosla
Assuming that two companies have equivalent risks, but one has more market risk then technology and vice versa, Kholsa would rather invest in the one with technology risk then the one with market risk.
Based on that very statement, I can infer that Kholsa is more a technology person. He's more comfortable with technology, he's a technologist, THAT's why he prefer companies with more technology risks. A salesman, someone very good at doing bulk sales, or a VC who knows market strategy very well, would choose the former.
Individual Judgement determines the perspective of risk. Yet, the inherent risk still exists!
Therefore, investors must always face the contradiction of knowing the company inside out, but have the ability to look at it from a "fresh" perspective.... a skill I'm always trying to achieve.
Another Interesting Nugget!
"One good metric of where there is good innovation potential is to go MIT and Standford and see what's the 1st choice for PHD studies in choosing project."
Hmm interesting metric. Have to test it out somehow by looking at the innovations at these Universities and see how many actually succeed.
Some of the ideas and investment he discussed.. I didnt think were very interesting after doing the maths. Lets see how things turn out lol
Companies supported by policy: To invest or not to Invest?
"As Venture Capitalists, we won't take policy risk. If the company will only be successful based on the implementation of policy XYZ, we won't invest."
Quote by David Gold, a partner at Access Venture Partners.
Interesting Statement.
I'll always had to struggle between whether one should invest in companies that are heavily dependent on policy.
One thing for sure is that if we treat this statement as a black and white ultimatum, we'll be missing out on much less economically viable companies.
Here in Asia, local governments such as Philippines and Thailand are favorable governmental incentives to make projects which would be otherwise ignored attractive.
Yet, Projects are still well-structured, makes fundamental economical and environmental sense and can still offer stable cash flows.
A single "policy", the kyoto protocol, created an entire market based on carbon cap-and-trade altogether, attract billions of dollars. Yet, it is also heavily dependent on policy.
I believe we have to be comfortable with companies that are only economically viable with the help of certain policies, and as long as it makes economical/environmental sense, with an adequate risk/return, it should be a viable project.
One should not simply ignore policy but really understand why it was there in the first place and what the long term impacts will be like.
Quote by David Gold, a partner at Access Venture Partners.
Interesting Statement.
I'll always had to struggle between whether one should invest in companies that are heavily dependent on policy.
One thing for sure is that if we treat this statement as a black and white ultimatum, we'll be missing out on much less economically viable companies.
Here in Asia, local governments such as Philippines and Thailand are favorable governmental incentives to make projects which would be otherwise ignored attractive.
Yet, Projects are still well-structured, makes fundamental economical and environmental sense and can still offer stable cash flows.
A single "policy", the kyoto protocol, created an entire market based on carbon cap-and-trade altogether, attract billions of dollars. Yet, it is also heavily dependent on policy.
I believe we have to be comfortable with companies that are only economically viable with the help of certain policies, and as long as it makes economical/environmental sense, with an adequate risk/return, it should be a viable project.
One should not simply ignore policy but really understand why it was there in the first place and what the long term impacts will be like.
Burying your Head in the Sand
http://www1.eere.energy.gov/vehiclesandfuels/pdfs/program/2008_energy_storage.pdf
About time someone notice that Li-ion batteries have several problems before mainstream application as batteries for EVs.
Not very sure why so many analyst are recommending stocks whose revenue comes from the sale of Li-ion Batteries to rise in price, the economies just doesn't make sense. Then again, whether EVs will be successful or not also relies on the car manufacturer's ability to have a economical car body that is well-suited for housing batteries.
I've always based my expectations on car batteries on the technologies' energy density/$ and efficiency, which I believe is the two most important elements, especially if you use a Life Cycle Cost Comparison Analysis.
I really dislike it when analyst write investment reports like journalist, they try to pick an "attractive" angle of a story eg :" Li-Ions are all the rage!!!" and just proceed recommend a stock.
The worst thing is that when the better alternative is not publicly listed, these analyst just ignore it and go for the "best available publicly listed" stock. Thats just so studpid. It's equivlent to burying your head in the sand.
About time someone notice that Li-ion batteries have several problems before mainstream application as batteries for EVs.
Not very sure why so many analyst are recommending stocks whose revenue comes from the sale of Li-ion Batteries to rise in price, the economies just doesn't make sense. Then again, whether EVs will be successful or not also relies on the car manufacturer's ability to have a economical car body that is well-suited for housing batteries.
I've always based my expectations on car batteries on the technologies' energy density/$ and efficiency, which I believe is the two most important elements, especially if you use a Life Cycle Cost Comparison Analysis.
I really dislike it when analyst write investment reports like journalist, they try to pick an "attractive" angle of a story eg :" Li-Ions are all the rage!!!" and just proceed recommend a stock.
The worst thing is that when the better alternative is not publicly listed, these analyst just ignore it and go for the "best available publicly listed" stock. Thats just so studpid. It's equivlent to burying your head in the sand.
Thursday, May 7, 2009
Great Coaching!
I had the very good fortune to receive personal coaching from my boss's friends. He used to work for 7 years at Mckinsey and it was really pleasure to receive some presentation tips from him.
He's leaving tomorrow but he was very courteous and friendly throughout the time he spent with us in the office. Best of all he treated me to a coffee when I ran out of cash :)
Here's some presentation tips he gave me.
Step 1: Think of the absolutely most important thing that you want the audience to remember. Picture yourself talking to a random person on the street. What kind of story do you want to say?
Step 2: Split up your story into short portions with as little words as possible. Put each portion into one slide. The less words there are on the slide, the more people will remember. Each slide title should contain the full meaning of the slide, and not just a generic slide title. Each point must be short and compelling to the reader
Step 3: Give Examples to Illustrate your points. Make sure the examples are interesting and have a fresh (unbiased) mind when choosing examples. In the financial world, use IRR instead of returns. Put points in bullet form if possible, and place Facts first instead of opinions ( more compelling). Try to be as specific as possible to keep things interesting (hard when you have many to comply to many NDA lol) Also, try not to use negatives in the presentation.
So thats it. 3 steps to make magic presentation. Will try my best to apply it to my future presentations :)
He's leaving tomorrow but he was very courteous and friendly throughout the time he spent with us in the office. Best of all he treated me to a coffee when I ran out of cash :)
Here's some presentation tips he gave me.
Step 1: Think of the absolutely most important thing that you want the audience to remember. Picture yourself talking to a random person on the street. What kind of story do you want to say?
Step 2: Split up your story into short portions with as little words as possible. Put each portion into one slide. The less words there are on the slide, the more people will remember. Each slide title should contain the full meaning of the slide, and not just a generic slide title. Each point must be short and compelling to the reader
Step 3: Give Examples to Illustrate your points. Make sure the examples are interesting and have a fresh (unbiased) mind when choosing examples. In the financial world, use IRR instead of returns. Put points in bullet form if possible, and place Facts first instead of opinions ( more compelling). Try to be as specific as possible to keep things interesting (hard when you have many to comply to many NDA lol) Also, try not to use negatives in the presentation.
So thats it. 3 steps to make magic presentation. Will try my best to apply it to my future presentations :)
Saturday, May 2, 2009
Tuesday, April 28, 2009
1. The Inter-Ministerial Committee for Sustainable Development (IMCSD) has unveiled a blueprint for Singapore’s sustainable development, detailing the key goals and initiatives for the next 10 to 20 years.
2. Speaking at a media conference, Minister for National Development and co-Chair of the IMCSD Mr Mah Bow Tan said, “The economic situation has changed dramatically since we set up this committee in February last year. The temptation is to slow down our efforts in the area of sustainable development while we tackle the immediate economic challenges. However, the two are not mutually exclusive. Even as we tackle the short-term challenges, we must build capability for our long-term development. Sustainable development must remain a national priority, in good times and bad, given our resource constraints, the demands of our growing city and the global challenge of climate change.” Minister Mah added, “Sustainable development can only be achieved through long-term attention and effort. We must act now. As individuals, we must be prepared to change the way we live, work, play and commute. As a nation, we have to invest to develop new technologies and alternative sources of energy.”
3. Dr Yaacob Ibrahim, Minister for the Environment and Water Resources and co-Chair of the IMCSD spoke on the targets the Committee has set. He said, “We have set concrete targets in the blueprint for 2020 and 2030 to guide our work. This reflects how serious we are about sustainable development. These targets will be reviewed regularly, as technology improves and the cost-effectiveness of measures changes.” Minister Yaacob also emphasized the role that all Singaporeans must play and how this could have a global impact, noting, “The government will play a catalytic role through setting aside $1bil to implement the IMCSD’s recommendations. However, achieving our goals will require a whole-of-nation effort. Through our joint efforts, Singapore can also do its part to contribute to global environmental sustainability.”
New Goals and Initiatives
4. The IMCSD’s blueprint details new targets and initiatives to improve resource efficiency and enhance Singapore’s urban environment. (Pl refer to Annex A). As a resource-scarce state dependant on imports, Singapore can become more competitive in the long run if it becomes more efficient in the use of resources such as energy, water and land. Therefore, the IMCSD has set targets in areas such as national energy efficiency, water consumption and recycling.
5. Singapore’s clean and green environment has made Singapore a good home for its residents, and an attractive destination for foreign visitors, talent and investments. Under the blueprint, efforts will be made to improve air quality, expand and open up green and blue spaces, conserve biodiversity and enhance public cleanliness. These efforts will make our urban environment even more liveable and attractive, even as Singapore continues to grow and develop. Targets have been set to measure the progress in these areas.
6. The blueprint also elaborates on plans to build new capabilities in sustainable development and foster community ownership and participation. The full report is available online at www.sustainablesingapore.gov.sg.
Public Consultation and Feedback
7. The blueprint for a sustainable Singapore is jointly created by the people, private and public sectors (3P) in Singapore. Over the span of one year, the IMCSD met with members of the public and leaders of non-governmental organizations, businesses, grassroots organizations, academia, media as well as Mayors. More than 700 people contributed their views through various focus group discussions, and members of the public submitted over 1,300 suggestions. The IMCSD would like to thank everyone for their invaluable inputs to the Committee’s deliberations, and hopes that the 3P sectors will be as supportive in the implementation of the blueprint, as they have been in its formulation.
About the IMCSD
8. The IMCSD was set up in Jan 2008 to formulate a clear national framework and strategy for Singapore’s sustainable development in the context of emerging domestic and global challenges. The IMCSD is co-chaired by the Minister for National Development Mr Mah Bow Tan, and the Minister for the Environment and Water Resources Dr Yaacob Ibrahim. The members are: the Minister for Finance Mr Tharman Shanmugaratnam, the Minister for Transport Mr Raymond Lim and the Senior Minister of State for Trade & Industry Mr S. Iswaran.
| Annex A |
TEN GOALS BY 2030
Improving our resource efficiency
1. Achieve 35% reduction in energy intensity (consumption per dollar GDP) from 2005 levels.
2. Achieve domestic water consumption of 140L per person per day, down from 156L per person per day.
3. Raise overall recycling rate to 70%.
4. Increase public transport modal share to 70% through doubling our rail network and developing a more integrated and seamless public transport system.
Enhancing our urban environment
5. Improve air quality by reducing ambient PM 2.5 (fine particles) levels to an annual mean of 12g/m3 and capping ambient SO2 (sulphur dioxide) levels at an annual mean of 15 g/m3.
6. Reach a park provision of 0.8ha per 1000 persons and increase skyrise greenery by 50ha. Park connectors will be lengthened from 100km to 360km.
7. Increase blue spaces by opening up 900ha of reservoirs and 100km of waterways for recreational activities.
8. Increase accessibility and convenience for pedestrians and cyclists by expanding our covered linkways and cycling networks.
Building capability and expertise
9. Build Singapore into an international knowledge hub in sustainable development solutions.
Building an environmentally responsible community
10. Achieve a community in Singapore where environmental responsibility is a part of our people and business culture.
NEW INITIATIVES
- Buildings will be made more energy efficient.
- $100mil Green Mark Incentive Scheme for existing buildings to undergo energy efficiency retrofitting.
- Green Mark GFA Incentive Scheme for new buildings that can attain Green Mark GoldPlus and Platinum ratings
- Green Mark GoldPlus and Platinum requirements will be incorporated as part of land sales requirements.
- Eco-friendly public housing. Solar technology will be piloted at 30 public housing precincts nationwide. HDB will reduce energy use of HDB common areas by 20% to 30% and build more eco-friendly HDB housing starting with developments along Punggol Waterway.
- Minimum performance standards for electrical appliances will be set to remove inefficient models from the market. The government will introduce minimum energy performance standards for household air-conditioners and refrigerators by 2011.
- A National Biodiversity Strategy and Action Plan has been formulated to protect natural heritage and biodiversity in Singapore. Singapore will champion the development of a City Biodiversity Index under the Convention on Biological Diversity.
- A greater push for clean transport including conducting clean transport technology trials and putting in place more cycling infrastructure. The trials will cover diesel hybrid buses, electric vehicles, as well as diesel particulate filters. More than $43 million will be invested into implementing cycling networks in selected HDB towns over the next 5 years.
- New schemes to promote skyrise greenery will be introduced. These include a pilot grant scheme to co-fund the installation of green roofs, and bonus commercial Gross Floor Area for outdoor refreshment area use on landscaped rooftop. New developments in selected areas will have to provide landscape areas equivalent to their overall site area.
- Clean technology and urban solutions will be promoted as new growth sectors. Jalan Bahar Clean Tech Park will be developed as the first business park to support R&D and test bedding of clean technologies.
- Marina Bay and the Jurong Lake District will be developed as Singapore’s new generation of sustainable high-density districts, through requirements for Green Mark GoldPlus and Platinum buildings, landscape replacement policies, sustainable urban design etc.
- District Sustainability Programmes will be implemented by each of the five Community Development Councils.
- The public sector will adopt a range of new sustainable development initiatives. New medium and large air-conditioned public buildings are to achieve Green Mark Platinum standard while existing large air-conditioned public buildings are to attain Green Mark GoldPlus by 2020. All government agencies are to implement recycling programmes by 2009 and achieve PUB’s Water Efficient Building label for their buildings by 2010.
(Taken from From http://app.mewr.gov.sg/web/contents/ContentsSSS.aspx?contid=1307)This is fantastic! I can visualize all the ESCOs (Energy Saving Companies) popping champagnes.
It's a good time to be focused on energy efficiency and renewable energy in Singapore. Equipment manufacturers such selling efficient generators, pumps, VSD and solar cells will probably have a easier time to sell their products while demand for such products increase.
Integrated Facilities Management will also be higher on the corporate agenda.
Time to look out on Singapore Stocks with a focus on such areas!
Will need to do some research during the weekend, but offhand here is one company that will stand to benefit in the long term.
CNA, listed on the SGX. A IFM based in Singapore moving more towards the energy efficiency space.
Monday, April 27, 2009
Account
Yesterday went to open an account with etrade.com.sg
Read from a forum that they are quite consistent. They charge a flat rate of USD 9.99-19.99 per trade.
From my previous trading experience I tend to do very little trades, so these costs dont bother me too much.
Apparently they get very few customers who go all the way to their office; most simply post when applying for an account. ( You have to fill in a non-American citizen delaraction form to have tax benefits) Since my office is nearby I decided to just drop in.
Account will be open in 5-7 working days. This will mean I can start trading up next week.
I will be posting Interim IRR of my portfolio from time to time. Lets see how things go
Read from a forum that they are quite consistent. They charge a flat rate of USD 9.99-19.99 per trade.
From my previous trading experience I tend to do very little trades, so these costs dont bother me too much.
Apparently they get very few customers who go all the way to their office; most simply post when applying for an account. ( You have to fill in a non-American citizen delaraction form to have tax benefits) Since my office is nearby I decided to just drop in.
Account will be open in 5-7 working days. This will mean I can start trading up next week.
I will be posting Interim IRR of my portfolio from time to time. Lets see how things go
Saturday, April 25, 2009
Soros pushes Powerspan to $50M for carbon capture
A group of investors, including George Soros, has funneled $50 million into Powerspan, a company that devises ways to remove carbon dioxide from coal plant emissions. The Portsmouth, N.H.-based company says it will use the new money to set up its system at a utility-scale demo plant in Ohio.
Already, Powerspan is implementing its ammonia-based technology at a 120-megawatt demo plant that is slated to be operational by 2012. The company claims it will catch and sequester more than a million metric tons of carbon dioxide at this facility every year.
The processes used to remove carbon dioxide from emissions are extremely expensive — and in this case, capital-intensive. In order to make installation possible, companies involved in carbon sequestration are almost always forced to depend on both venture and government sources of support. That’s why most world governments offer tax credits and other incentives to encourage utilities to adopt this type of technology.
In the U.S., the recent economic stimulus bill has allocated $3.4 billion for research on carbon-based fuels like coal. The Department of Energy is also offering loans to companies looking to commercialize products that clean up these fuel sources. Powerspan says it plans to apply for both the federal grants and loans. And when the time comes to garner DOE support, the company is ahead of the game, having already worked with one of its labs to refine the carbon-capture systems it plans to market.
Powerspan also has the advantage of having friends in high places. George Soros is a name to be reckoned with, certainly. Tenaska Energy, AllianceBernstein, Persimmon Tree Capital, NGEN Partners, Beacon Group, Tremont Group, RockPort Capital Partners, Calvert, Angeleno Group, Fluor Corp. and FirstEnergy also participated in the recent round of financing. Carbon sequestration is one area of cleantech that is just beginning to grow — and considering how hard any money is to come by in the sector these days, $50 million is a pretty impressive head start.
Taken from: http://venturebeat.com/2009/04/24/soros-pushes-powerspan-to-50m-for-carbon-capture-tech/I dont really understand the carbon capturing business for now. Seems that even with a cap-and-trade system in place, the payback periods and IRR for the project can still be quite low, according to an analysis I did few months back.
The good thing is if and when the cap-and-trade system takes place, operational cash flow will be fairly constant, as long as the host company keep up their level of production. Such carbon sequestering companies also have to rely on the credit worthiness of the host as a major consideration.
I'm thinking that these smart guys are anticipating a cap-and-trade system in the USA, and are now investing in the more promising technology. Since their money is on the table, they will/can most probably lobby for the system to be implemented. And when that happens, they would already have a stake in the more promising technologies. But my personal feeling is that they are investing simply because they dont wan to be left out, but they are not considering this to be their high growth success companies.
Lets see about that. In the meanwhile, I'll scout around some similar companies that may look attractive
Decided to start the investing actual by opening an account on Monday to start trading in US stocks.
Apparently if you file your information properly, you need not pay for taxes if you're not an American citizen.
here's what I have in plan,
1) Set up Trading Account
2) Buy 3-4 stocks from a shortlist of 12 stocks and see how things are going
3) Observe for a few months. If my IRR( or XIRR, since its less than a year) is more than 8%, I can start to think of investing other people's money for higher leverage.
Here is one stock i'm looking at.
1) Energy Recovery Institute
Apparently this company aims to decrease the cost of desalination for it to be competitive with other technologies. There are many reasons why I like this company but its primarily because I embarked on a similar project during my new venture creation of a Heat Pump based MED desalination system. In Theory the system I calculated can be a fraction of current RO costs, but this technology by ERI has already been operating and sucessfully decreasing the cost of desalination for many plants. So I figured, If you cant beat them, Join them!1
Some Reasons why I like this company
1) Great management team. HP Michelet is one of those serial entrepreneurs who has been starting up companies for a very long time.
2) Established Technology. As mentioned they are able to greatly decrease the cost of desal, which is really the achilies hell of desal today. Believe you me, I have read many many reports and I fully agree with that. This translate into a strong substainable competitive advantage
3) High Market Potential. Desalination is growing at double digit rates a yr. Even if ERI captures just a fraction of the market, it can still be very profitable.
Apparently if you file your information properly, you need not pay for taxes if you're not an American citizen.
here's what I have in plan,
1) Set up Trading Account
2) Buy 3-4 stocks from a shortlist of 12 stocks and see how things are going
3) Observe for a few months. If my IRR( or XIRR, since its less than a year) is more than 8%, I can start to think of investing other people's money for higher leverage.
Here is one stock i'm looking at.
1) Energy Recovery Institute
Apparently this company aims to decrease the cost of desalination for it to be competitive with other technologies. There are many reasons why I like this company but its primarily because I embarked on a similar project during my new venture creation of a Heat Pump based MED desalination system. In Theory the system I calculated can be a fraction of current RO costs, but this technology by ERI has already been operating and sucessfully decreasing the cost of desalination for many plants. So I figured, If you cant beat them, Join them!1
Some Reasons why I like this company
1) Great management team. HP Michelet is one of those serial entrepreneurs who has been starting up companies for a very long time.
2) Established Technology. As mentioned they are able to greatly decrease the cost of desal, which is really the achilies hell of desal today. Believe you me, I have read many many reports and I fully agree with that. This translate into a strong substainable competitive advantage
3) High Market Potential. Desalination is growing at double digit rates a yr. Even if ERI captures just a fraction of the market, it can still be very profitable.
Friday, April 24, 2009
Had the very good fortune of meeting a fantastic person yesterday.
He's probably every financier's dream entrepreneur --> passionate, leading expert in the field, practical, puts his own money, and has the rare ability to be self-critical on his own idea.
Throughout the discussion, I particularly like one saying : "Ideas are just like Children. The ones that belong to you always seem the best!"
He's probably every financier's dream entrepreneur --> passionate, leading expert in the field, practical, puts his own money, and has the rare ability to be self-critical on his own idea.
Throughout the discussion, I particularly like one saying : "Ideas are just like Children. The ones that belong to you always seem the best!"
Wednesday, April 22, 2009
Current Books
Suddenly Felt I should share the books I'm reading
1) Beyond the J Curve: Managing a portfolio of VC and PE fund
http://www.amazon.com/Beyond-Curve-Managing-Portfolio-Venture/dp/047001198X
Comments:
This is an amazing book. I've always been trying to find a good resource for VC/PE funds that goes beyond the theoretical surface information. Certain important parts such as how does the distribution waterfall actually work, whether the principal is repaid, how and when hurdle rate kicks in seems easy to understand but are difficult to apply. This is especially so when you try to contruct a financial model to see how does a PE/VC fund cashflow look like throughout the fund lifetime.
These concepts are very important but they are not explained fully in other books. So its very difficult when trying to understand a fully structured VC/PE model. This book however does provide much more indept explanation which is good :)
2) The 36 Strategies of the Chinese
Comments:
This is also a very good book, written by a NUS professor. It applies ancient chinese wisdom to a business setting. Being Chinese myself, and having a father who has sucessfully applied these strategies across various situations, I had read this book when I was very young in the past.
Now, with much more life experience, I have a very different pespective when reading this book. I will read it again when I reach 30 and see whether there is any new wisdom gained lol.
1) Beyond the J Curve: Managing a portfolio of VC and PE fund
http://www.amazon.com/Beyond-Curve-Managing-Portfolio-Venture/dp/047001198X
Comments:
This is an amazing book. I've always been trying to find a good resource for VC/PE funds that goes beyond the theoretical surface information. Certain important parts such as how does the distribution waterfall actually work, whether the principal is repaid, how and when hurdle rate kicks in seems easy to understand but are difficult to apply. This is especially so when you try to contruct a financial model to see how does a PE/VC fund cashflow look like throughout the fund lifetime.
These concepts are very important but they are not explained fully in other books. So its very difficult when trying to understand a fully structured VC/PE model. This book however does provide much more indept explanation which is good :)
2) The 36 Strategies of the Chinese
Comments:
This is also a very good book, written by a NUS professor. It applies ancient chinese wisdom to a business setting. Being Chinese myself, and having a father who has sucessfully applied these strategies across various situations, I had read this book when I was very young in the past.
Now, with much more life experience, I have a very different pespective when reading this book. I will read it again when I reach 30 and see whether there is any new wisdom gained lol.
Takeoff....
I've decided to start this blog to capitalize on the knowledge I gained while working at a leading renewable energy investment bank in Asia.
Since I'm researching on so many companies relating to Clean energy, energy efficiency, novel materials, I might as well use these skills to my advantage.
I feel this is one of the best time as this is also one of the world's greatest economic crisis. Many great stocks + companies are heavily undervalued, and this presents a great opportunity to invest.
I would also like to use this blog to discuss on new deals made by the venture capital community, so I can look back to see whether my assessments were accurate or not.
Lets see how things go from here
Since I'm researching on so many companies relating to Clean energy, energy efficiency, novel materials, I might as well use these skills to my advantage.
I feel this is one of the best time as this is also one of the world's greatest economic crisis. Many great stocks + companies are heavily undervalued, and this presents a great opportunity to invest.
I would also like to use this blog to discuss on new deals made by the venture capital community, so I can look back to see whether my assessments were accurate or not.
Lets see how things go from here
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