Upcoming FCC spectrum auction to be success? I’d bid on it

In the western region of our country where the Coalition for a Connected West (CCW) works, the tech sector is playing an increasingly vital role in state economies.  Access to high-speed Internet has inspired individuals from all walks of life to create opportunity for families and businesses. Read more

Measuring Impact Investing

 

Impact Investing Metrics

Rockies Venture Club Impact Investing

Impact Investing is a term that has a wide range of interpretations. In order to have credibility, consistency and clear understanding about what constitutes success in impact investing it’s important to have a clear set of metrics to understand the social, environmental and economic impacts of impact investments.

Impact is Big Business

The impact investing industry is growing fast with over a trillion dollars of investment over the next decade according to JP Morgan research reported in Business Ethics magazine.   Funds that are investing for others find more and more reasons that they need to have clear metrics to demonstrate that they are carrying out the mission of the investors.   While each fund may develop their own metrics individually, there are huge benefits to utilizing an agreed upon set of metrics across the industry to allow for apples-to-apples comparisons among funds.

Using standardized metrics provides a framework in which larger and larger amounts of investment can be made by sophisticated funds.  The result of this is that impact investing funds can eclipse philanthropic efforts in improving health, education, environment and quality of life for underserved markets.  There will always be a place for philanthropy, but research has shown many for-profit organizations have been able to bring greater impact with greater long term sustainability than those non-profits that provide one-time support.

While individual impact investors don’t have concerns about accountability or credibility, they should also be using metrics to help them understand and evaluate the deals that they are considering and to be able to hone their investing strategies to balance financial and social/environmental outcomes.  Individuals will want to understand their investing goals, but will also want to be able to select impact investments that match and support their own values.

Global Impact Investing Ratings

In 2011 B Labs worked with over 200 impact investing funds to create GIIRS (pronounced “gears”), the Global Impact Investing Ratings System and its IRIS Registry for impact funds.  Since then, GIIRS has become the defacto standard for measuring social and environmental impact on investments that are clear and verifiable by third parties.  Impact companies that want to know how they’re doing can take a free impact assessment provided by B Labs that will let them know how they are doing and to test their future strategies against industry benchmarks.  The ability to compare each company’s results based on standardized measures opens up huge new opportunities for B Corporations and for funds alike.  Just as having standardized GAAP accounting guidelines makes investment analysis for public companies efficient, having the GIIRS standard opens the door for large scale investment in impact companies.

Rockies Venture Club Impact Investing

To learn more about B corporations and hear pitches from active impact companies, , consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register

http://rockiesventureclub.wildapricot.org/Default.aspx?pageId=1349467&eventId=698729&EventViewMode=EventDetails

Impact Investing Success Stories

Impact Investing is not new and has been around since the 1960’s, if not before.  Since that time we’ve seen a lot of success stories coming from impact investments.  With these successes we’re also seeing significant amounts of dollars under management by impact investing funds with returns of 25% and up PLUS social and environmental impact.

Given the lack of early stage startup funding for impact companies, uncertainties with cleantech technologies, lack of governance in developing countries, lack of structured capital markets and exit opportunities in third world countries and the need to provide social and/or environmental impact, it’s a wonder that impact companies can return anything at all to investors.

In our research we’ve found many funds and foundations that have achieved financial success in making impact investments, but it’s sometimes difficult to find specific impact investments that have hit it big.  What is the next “Instagram” of Impact Investing?

Here is a story of a company that hit it big.  The good news is that they are not alone and that impact companies are doing well all the time.

dlight S300-Product-Thumbnaild.light (http://www.dlightdesign.com)  has created a product line of solar powered lanterns that bring light and power to third world communities where community electricity is not available.  D.light makes high quality, affordable solar lanterns that are distributed world-wide with over half a million units delivered each month, delivering light to over 20 million individuals and families.  The users pay less for solar lighting than traditional kerosene lanterns, plus  the lighting allows for greater productivity and income generation when people can work beyond daylight hours.  Students benefit from better study environments and homes are safer and healthier without kerosene fumes.  Finally, the reduction in carbon emissions is significant.  The statistics below show the social and environmental impacts of this company that is turning a good profit at the same time.

25,315,130 lives empowered

6,328,782 school-aged children reached with solar lighting

$767,644,065 saved in energy-related expenses

7,219,013,138 productive hours created for working and studying

1,794,878 tons of CO2 offset

30,807,967 kWh generated from renewable energy source

 

d.light has won numerous certifications and awards and is backed by an impressive collection of venture funds and foundations – all expecting to turn a profit on their investments.  D.light is a “B Corporation” which means that it is a for profit corporation, but that it must meet rigorous standards of social and environmental performance, accountability and transparency.

 

At Rockies Venture Club we hope to find companies like this each December at our Impact Investing Event and support local companies that are doing good all over the world.

To learn more about impact investing and to meet the founders of four great impact companies, consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register

http://rockiesventureclub.wildapricot.org/Default.aspx?pageId=1349467&eventId=698729&EventViewMode=EventDetails

 

 

Philanthropic investing?

Impact-Investing1December is the month in which 25% of American philanthropic dollars are donated.

December is also a month in which investors are making investments, balancing

portfolios and taking profits and losses for tax purposes.

This is a time for investors to be asking themselves whether they can accomplish their

philanthropic and investing goals at the same time.

 

Impact investing has become increasingly popular not only for foundations and family

offices, but also now for individuals.

 

What is “Impact Investing?”

 

The term Impact Investing has been coined to describe investments that have social or

environmental impacts in addition to the economic impacts for the investor’s portfolio.

There has been much debate about what constitutes an Impact Investment though,

since even the most profit minded investment may help communities with job growth

and possible environmental benefits. Sophisticated impact investors typically use

metrics to evaluate the potential social or environmental impacts, and individuals have

access to these as well, though individuals more often rely on a gut feeling to tell them

which investments they prefer.

 

Another debate in Impact Investing circles is how much, if any, reduced profit

expectations should the investor have when making impact investments. Corporate

investors and CSR (Corporate Social Responsibility) programs have developed

sophisticated guidelines for balancing the costs of social and environmental impact with

expected financial costs or returns. They use a “Triple Bottom Line” system to measure

social, environmental and economic impacts of their decisions. Individuals may use

their own guidelines that may apply to all impact investments they make or which may

be applied on a case by case basis. I have seen everything from “I’m just hoping to get

my money back some day” to those who show preference for impact investments, but

who also expect the same types of returns relative to risk that they would see on the

rest of their investment portfolio.

 

At Rockies Venture Club, we hold an impact investing event on the second Tuesday

of every December. We recruit expert speakers on the topic as well as four impact

companies seeking early stage investment. The criteria we use are very close to those

that we use every month when evaluating venture companies for investment. The

companies should have experienced and capable teams, a disruptive technology,

product or service, and a substantial market demand. The outcomes we’re looking for

include an “exit” for investors within about five years with a potential return of up to ten

times the original investment.

 

Rockies Venture Club also supports EFCO (the Entrepreneurs Foundation of Colorado)

Which helps start ups to donate one percent of their founders stock to community

organizations. In this way every company that achieves a successful exit can be an

impact company.

 

To learn more about impact investing and to meet the founders of four great impact

companies, consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register

http://rockiesventureclub.wildapricot.org/Default.aspx?pageId=1349467&eventId=698729&EventViewMode=EventDetails

Should Investors Expect Lower Returns for "Impact Investments"?

 

imact investing returnsOne of the main questions we get regarding impact investing is whether impact investing should be considered to be philanthropy with little or no returns or whether impact investing can be expected to have the same kind of returns that other investment opportunities on the market can offer. We like to think that with a good amount of deal-flow, we can provide a number of impact companies that are also great investments. Research from the Global Impact Investing Netowrk and J.P. Morgan corroborate this, with fully 65% of investors expecting market rate returns.
It’s interesting to note that 36% of those who indicated that their impact investments should return market rates also said that they would consider impact investments at below market rates. I think this is the general opinion of most Rockies Venture Club investors. They’re looking for market rate returns, but for impact companies with a great mission and an ability to demonstrate significant social or environmental impact, they are willing to consider a slightly lower return.
This attitude reflects the “triple bottom line” analysis that corporate CSR departments have implemented in which economic returns may be balanced with social environmental returns when proper metrics are in place to ensure a balanced return to the organization.
An interesting aside to this flexibility in returns for impact companies is an article in the November 25th Wall Street Journal citing a higher degree of happiness among those who regularly donated to philanthropic organizations. We hope that RVC investors who invest in impact companies have a quadruple bottom line return with economic, social, environmental and happiness impacts!

To learn more about Impact Investing and to hear speakers and pitches from Colorado Impact Companies, consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register

http://rockiesventureclub.wildapricot.org/Default.aspx?pageId=1349467&eventId=698729&EventViewMode=EventDetails

Impact Investing – Social Impact or Environmental Impact?

impact investing
When we talk about Impact Investing, we’re talking about investments that make an impact on our communities. There are many ways that this can happen, but the two most common categories are social and environmental impact. My intuitive guess was that environmental impact investing would comprise the greatest portion of investment, but what The Global Impact Investing Network (GIIN) and, J.P. Morgan found in their study “Perspectives on Progress: Impact Investor Survey” January, 2013, was that environmental and social impact investing were almost equal, with slightly more investing going to social impacts.
It’s interesting to note that these two areas have typically NOT been addressed by business interests and therefore must be dealt with by governmental or philanthropic organizations. (In fact Rockies Venture Club gets a lot of applications for “Impact Companies” who “create jobs” or further economic development through their capitalistic activities. While it’s great that these companies do impact their communities, we’re looking for the companies that do something materially different than the normal day-to-day companies out there.
Environmental impact companies are often “clean tech” or “green tech” in their approach. They’re addressing environmental needs in many ways such as wind and solar, energy storage and delivery systems, biofuels, alternative energy sources such as generating energy from waste dumps. These companies are now becoming successful at both returning a profit to investors as well as reducing our carbon footprint, reducing energy costs, and furthering energy independence. That’s a big impact that our big oil and gas companies have not been able to effectively deliver in the past – primarily because there was so much money to be made in traditional energy delivery. Environmental impact companies are making a difference by making alternative energy sources economical, often without government subsidies.
Social impact investments are often more difficult to quantify the returns, yet they account for fully 50% of impact investments according to GIIN, J.P. Morgan. Social impact investments that can provide a return often take the form of jobs programs, education with immediate returns in productivity, water and sanitation systems that create jobs and health benefits for communities, healthcare delivery in remote areas and more. Rockies Venture Club has seen tremendous creativity and energy spent in addressing global community needs by companies that are innovating and finding lower costs of delivery and sustainable income that returns profits to investors while benefitting communities.
To learn more about Impact Investing and to hear speakers and pitches from Colorado Impact Companies, consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register

http://rockiesventureclub.wildapricot.org/Default.aspx?pageId=1349467&eventId=698729&EventViewMode=EventDetails

Sun Number awarded $1 million by DOE to lower solar acquisition costs

by James Lester, Managing Consultant with Cleantech Finance

Rockies Venture Club presenter Sun Number has announced an award housesof approximately $1 million to expand the geographic coverage of its rooftop solar assessment services through the Department of Energy’s SunShot Incubator program. The award also enables Sun Number to expand the scope of its services by providing additional data that solar contractors will use to grow their businesses and lower customer acquisition costs.

“Being chosen as a SunShot 8 Incubator award recipient to commercialize Sun Number data will significantly accelerate our growth as a company.  The SunShot funding will be used to quickly expand into new cities increasing the number of buildings analyzed to approximately 35 million,” said David Herrmann, co-founder of Sun Number.

Herrmann added, “The funding will also be used to integrate additional data into the analysis of properties, including data on the likelihood of a building owner qualifying for a solar lease or loan, and the statistical likelihood that a building owner will be interested in solar based on a behavioral model that will be developed.  The data that Sun Number provides brings an installer closer to being able to complete the design of a PV system from their computer in a fraction of the time it currently takes.”

According to the company, Sun Number Scores will now include the economic suitability of a property for solar. Integrating the suitability of the roof for solar with the local cost of electricity, incentives, tax benefits, and the local cost of installation, the Sun Number Score will tell a homeowner if the economics of solar make sense for their building. The new Sun Number Score will be dynamic and as the variables mentioned above change, so will the score. Homeowners with a low score today will be able to set a threshold for the future and get notified when their Sun Number Score reaches that threshold.

The SunShot Program, initiated by the DOE in 2007, has incubated the emergence of 58 U.S. startups. The program has leveraged $104 million in federal money to generate more than $1.7 billion in private sector investment, or nearly $18 of private sector buy-in for every dollar of taxpayer support.

The long-term SunShot vision is for the U.S. to get 14 percent of its electricity from solar by 2030 and 27 percent by 2050 and to drive down the cost of solar electricity to $0.06 per kilowatt-hour.

“Over the last three years, the cost of a solar energy system has dropped by more than 70 percent,” DOE Secretary Ernest Moniz said in announcing the awards. The new investments will back more programs that reduce “soft costs like permitting, installation and interconnection” and “improve hardware performance and efficiency.”

Sun Number, previously profiled on the RVC blog here, was co-founded by Herrmann and Ryan Miller after receiving a $400,000 grant last year from the Sunshot Incubator. Sun Number used the funding to develop a tool to make it easier, faster and less expensive for both homeowners and solar companies to analyze the solar potential individual properties. The tool, known as a Sun Number Score, engages consumers by providing a solar analysis of their home or office building with an easy to understand score between 1 and 100, and then putting them in touch with a local solar professional. Solar professionals are able use the tool to reduce the costs of customer acquisition, often called ‘soft costs’.

If you would like to learn more about Sun Number, visit their website or contact David Herrmann at david.herrmann@sunnumber.com

Sun Number – Colorado Solar Analysis Company

Guest Post by James Lester, Managing Consultant with Cleantech Finance

Despite some well publicized difficulties for cleantech investors, one area in particular has been a very rewarding place for investors to put their money. An innovative business model known as third-party ownership, combined with the falling price of solar modules, has led to a boom in the US solar market. Residential solar installations in 2012 reached 488 megawatts, a 62 percent increase over 2011 installations. According to GTM Research, a solar photovoltaic system is installed every four minutes in the U.S.  A Colorado company is poised to take full advantage of this booming market, by providing unique data that give homeowners and solar installers a clear and simple assessment of a building’s solar potential.

sun number

Sun Number, co-founded by David Herrmann and Ryan Miller is building off a $400,000 grant from the Department of Energy’s Sunshot Incubator, awarded last year to develop a tool to make it easier, faster and less expensive for both homeowners and solar companies to analyze the solar potential individual properties. The tool, known as a Sun Number Score, engages consumers by providing a solar analysis of their home or office building with an easy to understand score between 1 and 100, and then putting them in touch with a local solar professional. Solar professionals use the tool to reduce the costs of customer acquisition.

The DOE’s SunShot program established a new $10 million competition last year for innovative, sustainable, and verifiable business practices that reduce what’s are known as “soft costs”. The cost of acquiring customers and designing systems to fit their homes represents about 45% of all balance of systems costs in the U.S. rooftop residential solar market, according to the DOE. These high marketing costs, by some estimates as high as almost $5,000 per residential customer, create barriers for both the potential solar energy consumer and the solar installer. While soft costs have fallen as the solar industry grows, experts believe that further declines must occur in order to for solar to reach grid parity with other energy sources.

A large part of these soft costs results from several different issues with the acquisition process. In some cases, an on-site visit occurs by a professional to estimate the solar potential and energy requirements/capability of a residential or commercial rooftop. This process is not only costly, but often slows down the consultation process with the customer by several days. In many other cases, professionals use Google Earth or another imagery based program to try to estimate the size and location of the system. This often results in inaccurate readings due to guesses on nearby shading and rooftop pitch angles. These imprecise estimates lead to poorly designed systems and reductions in energy savings benefits.

This is where the market opportunity for Sun Number lies. The company streamlines the solar installer’s customer acquisition process. Utilizing high-resolution aerial data, advanced GIS technology and proprietary algorithms, Sun Number reduces these soft costs by providing an accurate, inexpensive, and quick analysis of the property allowing salespeople to screen out unsuitable properties on first contact. Using only a street address and Sun Number’s easy to use interface, solar companies can immediately obtain information about a property’s solar suitability that was previously only available if they sent an employee on-site for a lengthy inspection.

“The trend in solar installations is that soft costs are increasing as a percentage of overall costs, in part due to the labor-intensive analysis necessary to evaluate the solar potential of a rooftop. Not only is it costly, but it slows the sales process to a crawl as both the provider and the customer are forced to wait for their schedules to align and the weather to cooperate. Our goal was to develop a tool that eliminates those high costs and allows providers to get that information instantly,” said Herrmann.

houses

The Sun Number Score represents the solar suitability of a building’s rooftop on a scale from 1 to 100, with 100 being the ideal rooftop for solar. Using a proprietary data set, Sun Number determines the solar-suitable square footage of a building by taking into account factors of importance to solar installers, including:

  • The pitch of every roof section
  • The orientation of every roof plane
  • Shade created by surrounding buildings that might impact solar potential
  • Shade created by surrounding vegetation that might impact solar potential

Additionally, Sun Number Scores will take into account regional factors such as:

  • Average sunshine for the market
  • Atmospheric conditions that may impact solar potential
  • Availability of local solar incentives
  • Regional cost of electricity for calculation of solar savings

While Sun Number considers themselves a ‘data-focused company, the company has much in common with the new wave of energy-related technology, dubbed ‘cleanweb’, which is increasingly getting the attention of venture capitalists for its promise of applying Internet business models and “big data” to clean energy. While many investors have been frightened from investing in ‘cleantech’ companies, this area in particular is attracting a lot of attention.

The Cleanweb, coined by venture capitalist Sunil Paul, describes technology companies that leverage the surge of available data in combination with the internet, social media and mobile to address society’s current resource constraints. When asked about the market potential of cleanweb, Paul said, “The cleanweb is the ability to distribute software and services on top of that infrastructure that makes it more efficient, and that is the next big evolution in cleantech.”

Rob Day, a partner with Black Coral Capital sees that there is significant interest from the venture capital community around the cleanweb business models and system integration. He describes these models as (sometimes financial-oriented, sometimes web-oriented, sometimes software and controls oriented, sometimes deployment-oriented, sometimes just plain services.

Sun Number has found a unique way to deploy rich data sets to reduce costs and increase the growth of the enormous market of solar rooftop installations. Thus far, Sun Number has processed data on over 7 million buildings in 12 metro areas.  The company plans to expand to more cities in 15 to 18 states that are best suited to the growing solar market. The company is also developing a customer focused interface, or ‘dashboard’ that will incorporate the next generation of Sun Number scores, which will include local economic incentives and changing installation and permitting costs. The company plans to implement a dynamic scoring system, which will notify consumers if their Sun Number Score has changed due to recent changes in policies or market conditions.

Herrmann comments, “It is estimated that the solar industry spent over $200M on residential customer qualification and acquisition in 2012, much of it on inaccurate and expensive solutions.  Sun Number is helping fuel the solar market growth by making available accurate low cost data that identifies properties and people that are most likely to purchase solar.”

If you would like to learn more about Sun Number, visit their website or contact David Herrmann at david.herrmann@sunnumber.com

 

Generic Go To Market Strategy: Startup Killer

taxi

A detailed, focused, and feasible go to market strategy is a critical distinguishing feature between the majority of startups that fail and the few that achieve great success.

As an example, imagine you are an angel investor listening to a pitch from a company developing an aftermarket add-on to improve automobile gas mileage. Its go-to-market strategy consists of identifying early adopters of efficient automobile technologies and targeting them at auto shows in environmentally conscious and heavily regulated states like California and Massachusetts. The company will sell products directly through its website while building relationships with aftermarket auto parts chains and independent retailers. The emphasis will be on young professionals, targeted through a massive web-based campaign to build awareness and drive adoption. Conversations with early customers will inform product improvements and enable the startup to refine its marketing pitch.

With a few minor changes, this generic and high level go-to-market strategy could apply to almost any technology in any market. As an angel investor, you’ve heard it many times before, and you’re skeptical: activities like “identifying and targeting early adopters”, “building awareness”, and “driving adoption” are easy to talk about but difficult to do well.

Now imagine you are an angel investor listening to another company that is at the same stage of development for an almost identical product. In this hypothetical example, the company tells you that it has identified automobile emissions reduction programs in three major US cities, with the largest in New York City (NYC).

NYC’s program offers attractive rebates for devices that reduce particulate emissions in cars. Although not the primary function of the startup’s device, the company was able to tweak its design slightly to take advantage of the little-known incentive. The company found a chain of aftermarket auto parts dealers in NYC that cater to environmentally conscious car owners, and it has engaged them in discussions about the product’s design and price point while exploring the potential for a distribution agreement. Additionally, a “green” NYC cab company is interested in advertising the product on the roofs of its cabs in exchange for discounts on the startups’ devices.

Based on the attractiveness of the market, the startup has decided to launch its product in NYC and quickly follow with launches in other major cities, starting with the other two that have automobile emissions reduction programs. It will use what it learns in NYC to refine its rollout in the other cities, which are already being planned to coincide with the ramping of the company’s manufacturing capabilities.

Which company would you have more confidence in as an investor? The second company is already doing all of the things the first company was only talking about: it has identified retail partners and early adopters, it has located the market where its offering has the lowest cost to consumers (thanks to the rebates), and it is focusing on a small geography where it can maximize the impact of every dollar spent on sales and marketing by taking advantage of network effects. It has a well-defined expansion plan linked to its manufacturing capabilities, so that it can grow at a fast but manageable pace. As a potential investor, even if you don’t agree with the plan, you know the company is thinking strategically and you have a starting point for suggesting changes.

Putting together a go-to-market strategy is easy, and every entrepreneur has one. Often it relies on the development of a product so great that it essentially sells itself: all the startup has to do is build it and let people know they can finally buy it. By the time entrepreneurs in this mode start thinking about the details of their go-to-market strategy, competitors may have already established themselves in the most attractive market segments and with the most valuable partners. This will make every future sale more difficult, because the startup is forced to pursue customers and partners less interested in its products. Additionally, if a pivot is necessary, entrepreneurs more focused on the technology than the market may not realize it until they have wasted major time and money. The final drawback of this approach is that savvy investors recognize its limitations, and that could make raising money difficult.

In an environment where the vast majority of startups fail, entrepreneurs with such a poorly defined go-to-market strategy are taking on a significant and unnecessary risk. How do you know when your strategy is detailed and focused enough? Ideally, you should be able to list the top 15-20 potential customers (for business to business startups) or the top 3-5 channel partners (for consumer focused startups) based on the features that distinguish your offering from the competition. You should be able to make a compelling argument about why these customers are more promising than those in other market segments, and you should be able to describe how you’re going to sell to them and how you will move beyond those initial customers to the broader market.

It takes time to figure out these details, so it is important to start early. It is much easier and faster to change an existing plan based on new information than to develop a plan from scratch at the last minute. With so many ways to fail, it would be a shame to let one so predictable kill your company.

Jay Holman is Principal of Venture to Market LLC, a Boulder based consultancy providing go to market services for new ventures in the cleantech industry.

1,000,000 New Reasons to Take Advantage of NREL’s Free Assistance for Cleantech Entrepreneurs

Visualization Lab, ESIFSince 2010 the National Renewable Energy Laboratory (NREL) has offered up to 40 hours of free assistance to U.S. based small businesses with fewer than 500 employees through its NREL Commercialization Assistance Program (NCAP). The Program is designed to “help emerging companies overcome technical barriers to commercializing clean energy technology”, and it does so by providing limited free access to NREL’s facilities and the technical expertise of its scientists. With the imminent opening of NREL’s new Energy Systems Integration Facility (ESIF), the scope of capabilities available to participants in NCAP and NREL’s other industry partnership programs is about to take a giant leap forward.

At its most basic level, ESIF is a collection of 15 laboratories covering everything from power systems integration, to electrical and thermal storage, to smart power, to materials characterization, to manufacturing, and more. You really have to see ESIF in person to fully appreciate the scale of the facility, and during my recent tour I was struck by the huge amount of space available for equipment testing and systems analysis. The only facility in the U.S. equipped with megawatt-scale (1,000,000 watts) test capabilities, the space is designed for large scale equipment and big experiments. The labs are interconnected with two AC and DC ring buses that allow experiments to expand beyond the walls of a single laboratory, and the facility has a SCADA system in place to monitor and control it all. Petascale computing at the on-site high performance computing data center and powerful data visualization tools round out the facility’s capabilities. The image above shows NREL Senior Scientists Ross Larson and Travis Kemper examining a 3D molecular model of PTMA film for battery applications in ESIF’s Insight Collaboration Laboratory.

The best news is, these laboratories are not just for NREL’s scientists: NREL actively encourages partnerships with industry that provide access to the lab’s facilities and technical experts. If you are a cleantech entrepreneur and haven’t yet familiarized yourself with NREL’s capabilities and industry partnership programs, it’s time to do so. Colorado based startups would be particularly remiss if they didn’t explore NCAP, the free commercialization assistance program mentioned above. The idea is pretty simple: if you have a technical or market related challenge in an area where NREL has some expertise, and you have a project that requires 40 or less NREL labor-hours to complete, you may be able to get support for the project for free.

According to Niccolo Aieta with NREL’s Innovation and Entrepreneurship Center, about 40% of companies interested in an NCAP project actually undertake one. The other companies typically find that their challenges aren’t a great match for NREL’s capabilities, or they have an issue that is too large or complex to be resolved in 40 labor-hours. However, don’t rule out a project until you’ve spoken to Dr. Aieta about the details, even if you don’t see relevant capabilities on NREL’s website (which I’ve found a bit challenging to navigate). Also keep in mind that projects are limited by the amount of time NREL employees can spend working on them, not by equipment or lab time. So if you need to leave a piece of equipment in place to test for a few weeks, then want some quick help evaluating the results, you won’t be excluded automatically due to the long test time.
If NCAP doesn’t work for you, and you are able to pay for support, NREL also works with companies through technology services agreements (TSA) and cooperative research and development agreements (CRADA). These are flexible arrangements that are customized on a project by project basis, so the best approach is simply to contact NREL and start a discussion. One nice feature about these programs is that partners pay NREL’s costs with no markup, which helps keep out of pocket expenses in line.

Besides the obvious benefits of working with a local world-class laboratory, there are additional reasons to engage with NREL that may not be apparent at first glance. Venture investors are still skittish about cleantech, thanks to the industry’s capital intensive nature and the long, risky time to market for cleantech innovations (note the recent rebranding of the Cleantech Fellows Institute to the Energy Fellows Institute). Increased emphasis is being placed on the value that large, well-established energy equipment firms can bring as strategic investors in cleantech startups. Clearly, the more visibility a startup can get with these companies the better, and NREL’s laboratories are great places to rub elbows with their technical staffs. ESIF in particular, with its unique capabilities related to megawatt-scale equipment and grid-scale integration, will be a magnet for large energy equipment companies and should present great opportunities for small local companies to engage with them.

Yes, the cleantech industry is difficult, but that only increases the value of the deep technical and market expertise that entrepreneurs can find in Colorado. Investors and entrepreneurs alike should take notice as the state’s cleantech resources experience a major expansion when ESIF comes online.

Jay Holman is Principal of Venture to Market LLC, a Boulder based consultancy providing go to market services for new ventures in the cleantech industry.