Category: Programs

Earth Day 2015: A new partnership for innovation between LACI and Greentown Labs


LACI partnering with Somerville, MA’s Greentown Labs to expand resources and market access for cleantech startups

Earth Day 2015 marks the beginning of a bi-coastal partnership between the two leading cleantech incubators in their respective markets. LACI and Greentown Labs have signed an agreement fostering collaboration between the Los Angeles and Boston area cleantech ecosystems to benefit early stage environmentally focused companies.

Greentown Labs is the first domestic partner to join LACI’s Network for Global Innovation (NGIN), which brings together innovation institutions around the world aimed at accelerating the commercialization of clean technology on a global scale.

“LACI is very excited to welcome Greentown Labs into the Network for Global Innovation family”, said Fred Walti, President and CEO of LACI. “They are an outstanding example of an incubator building significant cleantech companies and getting them successfully into the market. We’re excited and honored to have them join the rest of NGIN partners in Mexico, Finland, Germany, Italy, China, and Japan”.

In addition to exchanging best practices between startup ecosystems, the collaboration will also allow early stage companies to access each organization’s network of potential investors, customers, and partners. As part of the agreement, LACI and Greentown Labs are both hosting “Landing Pad” programs, a component of NGIN designed to help cleantech entrepreneurs enter NGIN members’ markets in a structured, cost-effective, and risk-mitigated way.

 “We see our partnership with LACI as critical to our startup companies, providing connections to new investors in new markets, both nationally and internationally”, said Greentown Labs CEO and Executive Director Emily Reichert.

LACI and Greentown Labs will offer office space, mentor and advisory services, networking, and showcase opportunities to each incubator’s portfolio companies, providing the foundation for successful market expansion for cleantech entrepreneurs. To date, NGIN partners in Beijing, Berlin, Los Angeles, and now the greater Boston area have Landing Pad programs available to cleantech startups in the network.

Announcing LACI @ ProspectSV

LACI@ProspectSV offers early stage support for promising clean technology companies designed to prime pilots and increase market adoption throughout California.

February 19, 2015 (Silicon Valley, CA) – Prospect Silicon Valley (ProspectSV) and the Los Angeles Cleantech Incubator (LACI) are excited to announce the launch of LACI@ProspectSV, results-oriented help for promising early stage companies that augment ProspectSV’s state-of-the-art Technology Demonstration Center and commercialization programs with LACI’s world-class incubation platform.  The LACI@ProspectSV initiative is part of the broader US Department of Energy (DOE) funded California Cleantech Commercialization Coalition (4C), the first statewide partnership to provide comprehensive support to clean energy startups.

ProspectSV is leading the way as a California commercialization catalyst for emerging clean technology companies that are ready to bring their product to market.  Their 23,000 sf facility supports leading technology pilots and demonstration projects, and has become a headquarters for product refinement, testing, and commercialization.  In addition, ProspectSV builds partnerships to leverage infrastructure as “living laboratories” for next-generation technology, providing a world-leading stage for investors, potential customers, global corporate leaders, and government policymakers to see innovation in traffic, vehicle, building and energy technology in action.

To help further meet the demands of many emerging companies, and to prepare them to leverage the substantial assets of ProspectSV, LACI will offer its incubation support to emerging companies at ProspectSV facilities.  In turn, ProspectSV will offer its facilities and expertise to help the companies that LACI currently serves in southern California.

“We are thrilled with this important partnership, and to be part of the 4C team representing California,” said Doug Davenport, Executive Director of ProspectSV, “Working together, our programs will make a great impact on emerging technology coming out of this part of the country and will create a model that can be used globally.”

“Connecting the best organizations across California, which serves as the global model for cleantech innovation, is the logical evolution of our cluster,” said Fred Walti, Executive Director of LACI.  “Together, we can better support the best young companies and see greater adoption in global markets.”

LACI is designed to help early-stage cleantech companies to deftly navigate the difficult startup years through its formalized support system, deep bench of expert mentors, strong network of investment capital and market resources, and pragmatic education and training, Named a UBI Global Top 10 Incubator in 2014 in just its 3rd year operating, LACI has formally incubated 30 companies that have secured over $50 million in funding and have created over 450 jobs.  LACI@ProspectSV is its second satellite, following the successful launch of LACI@CSUN in 2014.

This partnership between LACI and Prospect SV is a vital bridge between innovation and commercialization partners across California as part of the broader US Department of Energy (DOE) funded California Cleantech Commercialization Coalition (4C).  The 4C is the first statewide partnership to provide comprehensive support to clean energy startups, offering clean energy innovators a unique suite of full-spectrum, long-term support services to help them bring promising clean technologies to market, including best-in-class:

By unifying industry-leading incubation, prototype manufacturing, commercial-scale pilots, and market-entry programs, the 4C substantially de-risks an inherently risky sector, facilitating investment from a wide array of capital sources in California, the top clean technology market in the nation.  For information on the 4C, please visit

About Prospect Silicon Valley (ProspectSV)

Prospect Silicon Valley (ProspectSV) is the first nonprofit, Silicon Valley-based technology commercialization catalyst for smarter, cleaner cities globally. ProspectSV supports emerging technology companies with access to facilities, platforms, partners, and market connections, including its Demonstration Center, a $12 million, 23,000 sq. ft. facility with industrial and lab space, office and meeting rooms, promotional space and commercialization support staff. ProspectSV includes market connections and early adoption in the municipal sector through the Bay Area Climate Collaborative, a unique public-private partnership assisting communities across the Bay Area in taking on their biggest challenges in reducing carbon emissions.  Learn more at

About the Los Angeles Cleantech Incubator (LACI)

LACI is a non-profit, public-private partnership that helps promising companies deliver market-ready cleantech solutions and the jobs that come with them. LACI combines capital, universities, research, government support, entrepreneurs, corporate partners, and business leaders in order to drive innovation throughout the regional, state, and global economy.  Recognized as a Top 10 Global Incubator in 2014 by UBI, in its first three years LACI has helped 30+ companies who have raised $50+ million and have created 450+ jobs.  Learn more at


LACI Ranked as Top 10 Global Incubator

The UBI Index has ranked the Los Angeles Cleantech Incubator (LACI) in its world-renowned list of top 10 university associated business incubators for 2014 from among over 800 candidates in 67 countries.


“The Los Angeles Cleantech Incubator is one of the top business incubators in the world,” said Dhruv Bhatli, Co-Founder of UBI Index based in Sweden. “It provides exceptional value to its clients who have a higher survival and growth rate than the global average and become very attractive for buyers.”

Based on the one of the most comprehensive frameworks to measure incubator performance, UBI Index examines over 66 distinct criteria to determine each incubator’s economy enhancement performance, such as job creation and talent retention, value for their client base, such as access to funds and competence development, and the client’s post-incubation performance (see for details).

City of Los Angeles Mayor Eric Garcetti said, “We’re pleased to see this global recognition for the LA Cleantech Incubator, one of the many reasons our city is attracting new innovative and sustainable businesses that grow our local economy.”

“It’s an honor to be selected as a global top 10 incubator, which validates how much we have achieved in less than three years,” said LACI Executive Director Fred Walti. “I’ve had the opportunity to visit many fine innovation institutions around the world as part of our Global Innovation Network initiative and we’re proud to be among this high-performance peer group.”

Combined with the world’s fastest growing sector in clean technology, incubation is widely recognized as being one of the most effective tools for economic development. As incubation and acceleration options grow, it is important for companies to understand what value they get from incubators.

The UBI Index ranking reinforces other significant milestones in Los Angeles this year for LACI: it was selected by the US Department of Energy as one of three incubators nationally to receive funding, it was highlighted by JPMorgan Chase as one of the leading small business clusters in the US, it has publicly launching its first satellite incubator, LACI@CSUN, and the 30 companies that have joined LACI have now raised over $50 million dollars.

New SoCal Tech Center to Promote Alternative Fuel & Advanced Vehicles

Fresh off the wire, and a great win for SoCal…

The California Energy Commission has awarded funds to a consortium of Southern California-based organizations led by the Los Angeles County Economic Development Corporation (LAEDC) to establish a Southern California Center for Alternative Fuels and Advanced Vehicle Technology. The Center will consist of one virtual hub and two physical locations—one in San Diego, which will be managed by the California Center for Sustainable Energy, and one in Los Angeles, which will be managed by the Los Angeles Cleantech Incubator. The Center will serve the counties of Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara and Ventura.

“Southern California already boasts tremendous assets in driving the consumer-side of the advanced transportation market,” said Bill Allen, President and CEO, LAEDC. “Our goal with this critically important Center is to also leverage these assets to ensure that we’re a leading developer, designer and producer of these lower-emission technologies to add the high-value jobs and wages as well as the tax revenues that will result from a thriving advanced transportation cluster.”

The California Center for Sustainable Energy (CCSE), a nonprofit organization that administers the statewide Clean Vehicle Rebate Project for the California Air Resources Board, will operate the San Diego Center.  “Southern California already leads the state in the adoption of alternative fuel vehicles, but we are a long way from where we need to be to reach the state’s ambitious goals for reducing petroleum use and greenhouse gas emissions,” said CCSE Executive Director Len Hering, RADM, USN (ret.). “These two new centers and the online component will help municipalities, government agencies and industry partners better focus and direct their efforts to grow the market for cleaner transportation throughout the region.”

The Los Angeles Center will be managed by the Los Angeles Cleantech Incubator (LACI) at the La Kretz Innovation Campus in downtown Los Angeles. “LACI is thrilled to leverage its incubation programs and state-of-the-art campus to further advance the commercialization of alternative fuels and vehicle technologies in Southern California,” said Fred Walti, Executive Director of LACI. “The deeply committed and capable partners cooperating in this initiative represent an economic development powerhouse.”

“This project will be a great asset for our region,” said Assemblymember Bonnie Lowenthal, chair of the Assembly Transportation Committee. “Not only will they be developing alternative fuels and clean technology, they’ll be creating jobs that will drive economic growth for years to come.”

Additional partners receiving funding include the UCLA Smart Grid Energy Research Center and the Luskin Center for Innovation, Advanced Sustainability Institute, California State University-Los Angeles and the Inland Empire Economic Partnership.

The California Energy Commission contract is scheduled to begin in June 2014. The project will also use $1.6 million in matching funds from advanced transportation industry leaders. For more information about the Center, visit

About the LAEDC

The LAEDC, the region’s premier economic development leadership organization, is a private, non-profit organization established in 1981 under section 501(c)(3). Its mission is to attract, retain, and grow business and jobs for the regions of Los Angeles County. Since 1996, the LAEDC has helped to retain or attract over 190,000 annual jobs in Los Angeles County with an estimated labor income, including wages and benefits, of approximately $12 billion. Learn more at

About the Los Angeles Cleantech Incubator (LACI)

LACI is a private nonprofit that accelerates the commercialization of clean technologies in the Los Angeles region. Located in the center of the City’s Cleantech Corridor, LACI offers flexible office space, CEO coaching and mentoring, and access to a robust network of experts and capital. Incubated companies operate in a range of sectors including Smart Grid infrastructure, energy efficiency, energy storage, transportation, and materials science. LACI works closely with the region’s utilities, universities, business community, government institutions and capital markets to foster innovation and to grow the region’s green economy. Learn more at

About the California Center for Sustainable Energy

The California Center for Sustainable Energy (CCSE) is an independent, nonprofit organization that accelerates the transition to a sustainable world powered by clean energy. CCSE helps consumers, businesses, governments and others adopt energy efficiency, renewable energy and clean transportation technologies. Learn more at

Zen and the art of e-motorbicycle maintenance: creativity, meditation and innovation

I’d like you to meet the latest addition to the LACI family, Juicer Fine Electric Motorbicycles a talented designer tapping into the growing global electric chopper trend. Certainly all the Silver Lake hipsters hanging at Handsome Coffee Roasters down the road will now have something new to lust after, but beyond it’s obvious Made-in-LA street cred and how incredibly cool we think it is, this is an opportune moment to segue to the topic of creativity and innovation in technology.


The essence of successful entrepreneurship is defined by creativity (and hard work). Coming up with new ways to solve problems is often the initial impulse to found a startup, and then once underway finding creative ways to marshal the required resources and overcome the obstacles encountered at every turn is what differentiates the winners from the unemployed. However, surviving the Valley of Death and then excelling beyond requires more than just solid intellectual horsepower and analytics, it requires true creativity. Which brings us to the $10,000 question: what is creativity and how do we cultivate it, especially under the high stress conditions a startup entails?

Creativity is the production of something new and original. In general, creativity comes through when we’re relaxed, when the active, analytical part of the brain is superficially focused elsewhere, or obscured/numbed/diverted as so often happens with consciousness altering drugs (alcohol, marijuana, etc), during exercise, when driving or listening to music.  But hard as you may try, you can’t think your way into creative inspiration, it just happens in a flash, a torrential downpour of pure original thought, sometimes as a coherent whole and other times as the seed of an idea that must be nurtured and cultivated and perfected. Lest you think it stops there, though, just having a creative idea isn’t enough, it’s a two part process. After the initial burst of inspiration, there is the hard work, the blocking and tackling, the nuts and bolts labor of fleshing out the idea, fully realizing it, improving and perfecting it, and bringing it to fruition (well articulated by Steve Jobs).

However if creativity doesn’t come from the mind, where does it come from? Where is that “other” part of consciousness within which it resides? And how does it get there? The short answer is that it comes from other parts of ourselves, from our subconscious, or depending on your philosophical bent, from other planes of reality – what quantum physics might term, the Unified Field. But regardless of your belief in its origins, one indisputable fact is that training your active mind to relax and get out of the way enables you to access the intuitive, creative part more easily. And meditation is a healthy tool (with lots of other benefits) that can be used to enable high levels of creative flow. David Lynch is a big believer, and Norman Seeff has documented it amongst hundreds of world renowned artists, engineers, businesspeople and others.

What does this mean for you as an entrepreneur? How can you learn these techniques and put them to use in your own life to make your own dent in the universe? Well, let me tell you. LACI is launching a new program called Zen Bootcamp: Meditation for Entrepreneurs. Is it just about Zen? No. It’s a survey of a wide variety of different meditation techniques, their physiological impacts (think brain wave patterns) and an overview of some of the most powerful creative processes out there to help you get your bearings and navigate the landscape. What will it do for you? Hopefully make you the next Apple, but if not, at least catapult you forward Chuck Norris style into the sustainability beyond and help you conquer our planet’s most challenging and vexing problems.

We’re certain this is a global first for incubator programs, and think it’s apropros that LA is where it’s all beginning. So watch for the details on our website soon, till then, order your own Juicer motorbicycle (or come see it at LACI) and make all the snarky coffee chugging plaid shirt wearing mustachioed hipsters falter in their relaxed cool affectation as they furiously fume with jealously while you’re whistling by on battery power…

– Ian

LACI welcomes Ecoponex, Isidore, Revoterial, and Sun-Engine to the family

Please welcome four exciting additions to the LACI family: Ecoponex, Isidore, Revoterial, and Sun-Engine.

Reviewing and vetting the folks that apply to LACI is a labor of love, and we see a lot of great people, ideas and companies. Only the best get in. Please join us in welcoming four of the newest companies in the LACI portfolio.

Ecoponex Systems International

World-class, closed-loop system to produce healthy food, pure water, and renewable energy at 50x the per acre output of land today.

Benjamin Brant invites us to imagine an urban farm… a “living machine” that converts solar energy and natural ingredients into food. It creates fresh, pure water (even from wastewater) as an afterthought. And its done in a system that actually produces more energy than it needs. Now, imagine it in the middle of LA, as a vertical farm that diverts waste, delivers healthy / organic food, and creates good jobs and a learning environment for the community. Oh, and it can be more profitable than most commercial buildings.


Isidore Electronics Recycling

Woman-owned, triple bottom line social enterprise that combines best practices in e-waste management with training and jobs for previously incarcerated Angelenos who face barriers to employment.

Kabira Stokes isn’t in the commodity business… she’s using it as a metaphor for social and environmental transformation. By re-imagining what “recycling” means, Isidore combines what we all know we should do (re- and up-cycle yesterday’s electronics), with what we all deep down want to do (help people that deserve a second chance). Hardworking people coming out of our prison systems get good jobs with a purpose at Isidore, taking the 75% of electronics that end up in the dump and transforming them back into useful stuff in Los Angeles. What’s not to like?



Materials that are 100% natural and renewable, incredibly durable, and designed to simplify and clean up the highly toxic fashion industry efficiently and cost effectively.

Yotam Solomon is good at breaking boundaries. As a highly-accomplished fashion designer, he quickly disarms the most skeptical technologists with his knowledge of material science and the nuts and bolts of how the fashion industry works. Good thing too, as he’s bringing to market materials that are tested and safe enough to put into our bodies through surgery, yet promise to deliver clothing and accessories that are 100% natural and recyclable, more durable, cheaper and simpler than anything available today.



Combines breakthrough heat engine with industry-leading solar thermal technology to produce clean electrical energy 24/7, generating 5 to 10 times more kWh per square foot than conventional PV systems.

Tim Biehler and Benjamin Brant (yes, of Ecoponex as well) have learned a few things over their decades of experience in renewable energy, like how to integrate best-of-breed systems. Today, everybody understands solar, as well as its limitations (like, complete reliance on that largest of bodies, the Sun). Well, cloudy days may well be behind us, as these fine folks have figured out how to combine patented systems to deliver 100% renewable energy 24 hours a day, at a greatly reduced cost to today’s solar arrays.

About LACI

The Los Angeles Cleantech Incubator (LACI) is a private nonprofit founded by the City of Los Angeles to accelerate the commercialization of clean technologies in the Los Angeles region. Located in the center of the City’s Cleantech Corridor, LACI offers flexible office space, CEO coaching and mentoring, and access to a robust network of experts and capital. Incubated companies operate in a range of sectors including infrastructure, energy efficiency, energy storage, transportation, water, agriculture, and materials science. LACI works closely with the region’s universities, business community, government institutions, capital markets and utilities to foster innovation and to grow the region’s green economy.

Once the permanent La Kretz Innovation Campus opens in 2015, LACI is expected to sustainably accelerate the growth of dozens more promising companies and entrepreneurs in world-class facilities that include wet labs, dry labs, prototype manufacturing space, conference space, and strategically aligned partners all in one convenient location.  It is anticipated that, over its first five years, LACI can help create over 1,600 direct and indirect jobs.

LACI Receives $200,000 from JPMorgan Chase

Fresh off the wire…

The Los Angeles Cleantech Incubator (LACI) announced today that it will create more than 1,000 jobs over the next five years with the help of a $200,000 grant from the JPMorgan Chase Foundation. The grant will fund key programs focused on advancing sustainable technology development and adoption in the Los Angeles region.

Since launching two years ago, LACI has incubated 25 companies that have received more than $24 million in investments.  LACI and those companies have helped to create more than 100 direct jobs and an estimated 180 indirect jobs, while bringing innovative products and services to market.  Incubated companies operate in a variety of sectors including energy generation and efficiency, water conservation, electric transportation, recycling, waste management, sustainable materials and food production. LACI has provided these start-up companies with office space, executive coaching and mentoring and access to a network of experts and capital sources.

“On behalf of the City of Los Angeles, I would like to thank the JPMorgan Chase Foundation for their generous support of the Los Angeles Cleantech Incubator,” said Los Angeles Mayor Eric Garcetti. “LACI plays a key role creating jobs, building a stronger cleantech industry cluster and generating opportunities to train Angelenos in tomorrow’s green careers, today.”

LACI works closely with the Mayor’s office to identify, attract and accelerate the growth of businesses with clean technologies that will support the city in meeting its environmental, renewable energy, energy efficiency and related goals. In addition, LACI holds a close strategic relationship with the Los Angeles Department of Water and Power, acting as a scout in the region to identify and accelerate technology that supports their pursuit of innovative clean technologies for water conservation and renewable power.

“We’re thrilled to have a true partner in JPMorgan Chase, whose global reach, deep capability, and strong corporate responsibility will help strengthen and extend our efforts in the Los Angeles region and beyond,” said Fred Walti II, Executive Director of LACI.  “The substantial support of one of the world’s leading financial institutions is symbolic of the effectiveness of our programs and confirms that we’re collectively headed in the right direction.”

“JPMorgan Chase recognizes that economic growth and rising living standards fundamentally rely on the abundance and vitality of the planet’s resources and ecosystems,” said Alice Rodriguez, Chase California Region Business Banking Manager.  “Our strong commitment to furthering these mutual goals fits perfectly with our support of the Los Angeles Cleantech Incubator, which is setting new standards with innovative ways to help promising cleantech companies grow and thrive.”

The JPMorgan grant will enable LACI to expand its core training and educational programs and launch a feasibility study on establishing an Innovation Fund to provide early-stage funding to start-ups.

Construction of LACI’s permanent home – the La Kretz Innovation Campus – is now underway in Downtown Los Angeles’ Arts District.  Once the campus opens in 2015, LACI is expected to accelerate the growth of dozens more promising companies and entrepreneurs in world-class facilities that include wet labs, dry labs, prototype manufacturing space, workforce training and strategically aligned partners, all in one location.

About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2.4 trillion and operations worldwide. The firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at

About the LA Cleantech Incubator

The LA Cleantech Incubator is a private nonprofit that accelerates the commercialization of clean technologies in the Los Angeles region. Located in the center of the City’s Cleantech Corridor, LACI offers flexible office space, CEO coaching and mentoring, and access to a robust network of experts and capital. Incubated companies operate in a range of sectors including Smart Grid infrastructure, energy efficiency, energy storage, electric transportation, and materials science. LACI works closely with the region’s utilities, universities, business community, government institutions, capital markets and utilities to foster innovation and to grow the region’s green economy.  Learn more at

The New (Profitable) Model of Cleantech Innovation

Innovation is easy, right?  

Software/Web innovation has their model nailed. The wham-bam-thank-you-Y-Combinator process combined with caffeine and electrons rapidly ramps companies, creates whole new sets of things consumers never knew they needed (but now simply can’t live without), and delivers market index +3 returns to LPs who continue pouring money into the space. It took a market crash and 15 years to get there, but hats off, it works. Software creates money.

But Cleantech creates jobs , and the kind of jobs American cities need most. It’s also species-survial-mission-critical, unless you think all the crazy weather (and mounting insurance and ancillary costs) are just a rogue anomaly.  But building stuff is hard work, and the Valley of Death is a lot longer and more treacherous.  We’re still figuring out the money part, but that’s progressing by leaps and bounds.

What is the right model for Cleantech innovation?

It’s one that fosters technological breakthroughs, efficiently grows companies, ensures investment returns commensurate with risk, and delivers deployment where most needed. The key lesson from the last 7 or 8 years is that the push model that Software/Web utilizes just doesn’t work very well in this sector. We aren’t dreaming up new wants. By and large, the problems Cleantech solves for are understood: use less energy, use less water, create less carbon, etc, and the conditions bounding these problems are pretty well understood too. Even the markets they encompass can be projected with relative accuracy. What is more difficult, however, is the time it takes to get the solutions developed and manufactured, the challenges of deploying against legacy systems and incumbents, and the unforeseen role regulations can play in market structure and economics. All doosies compared to apps that let you blow up smirking pigs.

Cleantech entrepreneurs have the same challenges as others:

  • What to do
  • When to do it (collectively, “experience”), and
  • How to acquire the resources and expertise required (“relationships”)

These are similar challenges to what software entrepreneurs also face, the difference is the time and cost of pivoting. Retargeting Yelp is different from retargeting Solyndra, a kayak turns faster than a tanker, electrons rearrange faster than iron atoms. The end result is that there is a lot less room for error for Cleantech entrepreneurs.

What do they spend most of their time doing? A couple of core things. Learning about their industry, performing market analysis, perfecting their solution and developing networks of contacts. In cleantech you’re generally not creating entirely new markets, you’re fracturing existing ones and that bedrock is dense. Overall, it can be a grossly inefficient and capital intensive process, especially as it’s currently done. So, what’s a better way?

It takes a village to raise a Cleantech startup.  

It takes a village to profitably raise a cleantech startup, which is why a new tough-love-make-a-wish approach is necessary. There are two pieces to the equation.
  • Incubation involves wrapping a team of seasoned mentors, advisors, service providers, and domain experts around the startup, plus a dose of targeted training, office/lab space and technical resources for little or no cost, that provides non or low-dilutive value and is cash efficient. The incubator provides this by being regionally supported (by visionary civic and industry leaders!) and aggregating and coordinating the various components of the ecosystem. It’s like the startup getting an entire team working on their behalf for very nearly free. And free is about as capital efficient as it gets.
  • Market Pull (our Wishlist™ program) involves turning the traditional innovation model on its head. Instead of researchers/entrepreneurs coming up with cool new ideas then trying to find markets that will enable them to make money, we go directly to the market itself and figure out what it needs, then pull the solution across the Valley of Death. As a case study, a large regional utility has identified three technology areas that are critical to their long term growth and sustainability. As part of the project they have: bounded the current problem set (e.g. it costs us $$ per XX to deliver XX), identified the sought after solution set (e.g. needs to produce XX per XX for $$), approximated the addressable and global markets, committed to demonstration testing of promising technologies, committed to provide investment capital ($1M), and promised to deploy the solution broadly within their territory. Our job? Research the verticals globally, figure out the most promising solutions, vet the technology, recruit the entrepreneurs to LA, fund them, incubate them, and help them set up manufacturing locally and go to market. Making the entire process much more efficient for everyone.

What makes this a better model?

In a nutshell, it’s faster and light years less risky. We’ve significantly removed many of the uncertainties around each element of the company’s growth and development:

  • Market Risk: by having the end user define the economics of the problem AND the targeted solution, as well as their own addressable market and the estimated macro market, the entrepreneur has a target to work against and a clear understanding of the economics. No more guessing about what is required for the solution to be successful.
  • Customer Engagement Risk: the end user agrees UP FRONT to demo, test and deploy the technology if it works to spec. All the entrepreneur team has to do is execute against the technology development strategy.
  • Sales Risk: understanding and cracking the sales process and replacement cycle for utilities, large industrials and government is expensive and time consuming. Under our model the entrepreneur is guaranteed access to at least one large customer, and also is able to get an insider’s perspective on how to ramp up sales to others in the sector.
  • Product Validation Risk: the end user provides affirmation to investors and other buyers that the technology is sound, driving growth in other areas of the market.
  • Regulatory Risk: large end users have the resources to track regulatory trends and plan strategically. By defining their core focus areas they are able to give the entrepreneur and investors comfort that the regulatory environment will remain aligned as the technology comes to market.
  • Startup Risk: by embedding the entrepreneur within an incubator they vastly increase their odds of success. 85% of incubated companies are still in business 5 years later.
  • Financing Risk: all of these factors combined contribute to a much lower risk profile, significantly increasing the odds of investor support and favorable terms
How’s it going so far? Curious how we make it happen? We’re going to devote a whole day to talking about it. Come to our November conference to learn about all the details….

New Cleantech Innovation Models – The Rebirth

phoenixThe most common plea from our portfolio companies is for help raising early stage capital, so I spend a disproportionate amount of time working on this issue, which also means watching how the cleantech space generally is evolving and here at the Incubator, experimenting with new models that are sustainable, profitable and repeatable. Sourcing seed or Series A investment isn’t an easy request to deliver on in the current environment and the fallout from the missteps and enthusiasm of the last 5 years of cleantech investing has been well documented, but there is good news. A consensus is emerging that we’re at the turning point in getting smart about how you build cleantech companies, which will begin to return the sector to the interest of investors. What’s up? Rob Day makes a good case for how the industry is evolving and maturing, which I think is spot on. Investors are smarter (or wiser at least), the ecosystem is more cooperatively aware (it pays to play nice with others), entrepreneurs are more experienced (even if somewhat singed) and the rumor mill abounds with stories of 2013 exits imminent, though whether this will just finally flush out the bad news or actually substantiate the mark-to-market and provide LPs some upside still remains to be seen.

Why is the cleantech nut so hard to crack? What are the issues that make cleantech different from other sectors? First, cleantech isn’t software/web/mobile – there are carbon, iron and lots of other atoms involved, not just electrons, neurons and caffeine, hence, pivots take much longer and are much more expensive. Second, products have a much longer timeline for commercialization (trudging across the valley of death) and the risk of the fundamental market dynamics changing by the time a company finally launches is significantly greater (<<insert your favorite cleantech roadkill here>>). Third, regulations and government have a disproportionate affect on market evolution, adding uncertainty and high variability (ITC wind credit), and finally, industry relationships, especially with incumbents, are much more critical to scale up (have you ever tried to sell into a utility?). So the challenge is, how do you deal with these issues in a way that brings competitive investment returns to the sector? And more specifically, how do early stage companies raise capital?

Here’s what we’re seeing from the front lines  in Los Angeles that show early signs of success:

  • Pull Versus Push: incumbent industry, utility and municipal players are becoming more proactive in seeking out solutions they need to address impending regulatory and sustainability issues and pulling them to market instead of relying on entrepreneurs to push products where they hope there’s a fit. This takes a whole bunch of inefficiencies out of the process: entrepreneurs have a much clearer view of real market economics, scope and sensitivities; industry gets the solution they’re looking for, instead of sifting through countless pitches from over the transom, and investors get innovation companies with built in technology validation and customer engagement. Much lower risk of failure. Much faster time to market. Much faster growth and exit. Everybody comes out ahead.
  • All Of The Above Approach: Investors targeting early stage cleantech companies are coming from an increasingly broad range of perspectives: crowdsourced high net worth, professional angels, double and triple bottom line venture funds, foundations, government (Fed, State and local), industry, family offices, incubator attached funds, and traditional venture capital.  Because of the social and environmental benefits connected to sustainability innovation, a much broader swathe of players are attracted to the space. This means many more avenues of funding for entrepreneurs, but also much more complication and effort required to work through the options. It’s not as simple as friends/family/angel – VC – PE – IPO/Acquisition, and complicating things, many of these players are new entrants in the last couple years and still getting their legs under them with regard to deploying capital at scale. The important thing though, is that there is a lot of creative thinking and exploration going on to figure out how to put capital to work.
  • Regional Coordination: However this occurs, whether by an incubator, an industry group, regional center, university or some other public/private partnership, an organization that smooths the interaction among all the players is essential. Entrepreneurs are always short on time, and new entrepreneurs in particular are short on experience and connections. A regional player that brings a virtual support team to get behind companies can vastly improve the odds of success. Think about how much time you spend searching for the right personal connection, think about how much effort it is to understand shifting market dynamics for your product or service, or early stage investment structures, or IP process, or HR issues, or design/branding/marketing on social media, etc. A well staffed and designed regional support center can save entrepreneurs untold hours and missteps by making the learning curve on all of the issues above much flatter. And time saved is money saved.

I’ll be diving into each of the topics above in greater detail over the next few weeks, but the take home message is this. There’s hope, things are improving, we’re probably past the worst of it, and those left standing and still focused on the space will likely see their efforts well rewarded over the next handful of years. Stay tuned and keep the faith, the rebirth is imminent….