Colorado Angels Have Unfair Advantage Investing in Cleantech

Colorado has a lot to offer cleantech entrepreneurs, from targeted grants, to easy access to NREL’s technology commercialization resources, to cleantech focused entrepreneurial programs at top research universities, to name just a few. There is no more supportive place in the country to launch a cleantech company, which gives local angels a distinct advantage when investing in this growing, and complex, industry. Colorado knows about investing in cleantech.

The only way the community could do more to support cleantech would be to scour the country for experienced, successful entrepreneurs, bring them to Colorado and immerse them in the local cleantech ecosystem, then provide guidance from industry experts as they develop business ideas around one of the numerous innovations emerging from local government labs and universities. Enter the Cleantech Fellows Institute, a Colorado Cleantech Industry Association (CCIA) program established to do exactly that.

The Institute kicked off in 2012, with a class of 5 Fellows who had considerable entrepreneurial experience outside the cleantech industry. The Fellows knew how to start a business, but they didn’t know cleantech, so they spent 175 curriculum hours listening to 160 speakers, and took almost 30 cleantech related tours, to come up to speed. Each Fellow undertook a capstone project centered on a new cleantech business idea, and in the Institute’s inaugural year this exercise led to the creation of two seed-stage companies and one non-profit.

Under the direction of Executive Director Steve Berens, the Institute is now accepting applications for its second class of Fellows. This year the program is undergoing some changes based on lessons learned from the first class, including an expanded international component. The program will include a week during which delegates from around the world descend on Colorado to participate in the Institute’s activities and make connections between the cleantech communities in Colorado and their home countries.

Clearly, Colorado is putting a lot of effort into stacking the odds in favor of the Fellows and the cleantech companies they hope will emerge from the Institute. The VC community has taken notice, as evidenced by the 19 venture capital partners the program has brought on board to date. However, there is room for additional engagement from Colorado based angels, who have an advantage in their ability to participate throughout the process since the Institute is based in their own backyard. Interested angels can send an email to mailto:info@cleantechfellows.comto learn more and sign up for regular email updates.

Even with all of the support Fellows will receive through the Institute, cleantech remains one of the most challenging industries in which to start a new venture. The Cleantech Fellows Institute provides access to critical knowledge and a great support network, which will reduce risks in my opinion but it certainly doesn’t come close to eliminating them. The real determinant of the program’s ability to spawn successful cleantech startups is underway right now: the Fellows application process. The quality of the Fellows accepted into the program will have the greatest influence on how successful it is, and the ability of local angels to get to know the Fellows over the course of the program is an opportunity that should not be missed.

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.

 

 

Swift Tram Wants to Get You High

Guest Post by Jay Holman, Principal of Venture to Market LLC

Recently declared the third most investable startup at the 2013 Angel Capital Summit, Boulder based Swift Tram wants to revolutionize public transportation by taking it high above the streets. The company envisions riders zipping along in suspended coaches 20 feet off the ground, gliding unimpeded over traffic jams, accidents, and icy roads to reach their destinations quickly and predictably. And, perhaps best of all, Swift Tram expects construction of its routes to cost less and take less time than adding light rail or bus lanes to existing travel routes.

With such an attractive set of benefits, observers could be excused for wondering why no one has gone down this road before. In fact, they have: a suspended coach system (also called a suspended monorail) built in Wuppertal, Germany in 1901 is still running today. More recently, Siemens completed one in 2003, and Aerobus is supposedly building one in Weihai, China, but its current status is unclear. However, despite these examples and a number of others not listed, suspended coaches have played a very minor role in public transportation to date.

What makes Swift Tram different? According to Founder and CEO Carl Lawrence, it’s the cumulative effect of many recent technological advancements all incorporated into a new, modern design. Swift Tram has filed two provisional patents covering advancements intended to, among other things, improve the speed, efficiency and reliability of suspended coach systems while reducing operating costs. Understanding the company’s innovations first requires a general explanation of their new approach to an old method of transportation.

The Swift Tram system consists of coaches suspended beneath large tubular guideways that are supported by regularly spaced towers (see image above). Drive bogies travel through the inside of the hollow guideways and connect to the passenger carrying coaches beneath them through a channel that cuts through the bottom of the guideways (see image below). The bogies are the true heart of the system: they contain motors powered by electricity delivered through the guideways, and house the intelligence that enables the fully automated system.

The bogies will be designed to carry the coaches at average speeds of 45 to 75 mph, and will be fully automated, so no driver will be required in the coaches. The ability to operate without drivers is key to the operational efficiencies Swift Tram is counting on to make its approach economical. Not only does it allow the company to save the labor costs associated with drivers, but it significantly reduces the overhead associated with running smaller, more frequent coaches. By running coaches more frequently Swift Tram would reduce wait times for passengers, leading to happier passengers and, ideally, increased ridership.

Efficiency gains in the bogies would come from incremental improvements over historical designs, such as the use of regenerative braking and smaller, more efficient motors. At the system level, smaller motors would enable smaller bogies and smaller guideways, cutting construction and material costs. Swift Tram plans to pursue additional system level efficiencies by designing smart bogies that can coordinate their activities to minimize power draw system wide. In addition to using less electricity than traditional suspended coach drive mechanisms, they also would reduce the size of the electric grid required to support the system, again cutting construction and material costs.

By incorporating these and other design improvements drawn from recent developments in the smart grid, electric vehicle, and related industries, Swift Tram hopes to pull together a system that overcomes the challenges that have slowed widespread adoption of suspended coaches to date.

Currently, Swift Tram is focused on establishing the partnerships it will need to realize its vision. The company plans to manufacture the drive bogies, outfit the coaches, and develop the software for the control centers in-house, while manufacturing and construction of other system components will be outsourced. An in-house prototype of the bogie is under development, and Swift is raising a $1M seed round to support the engineering design of the total system. The company anticipates raising a couple of additional rounds to support prototyping, testing, and manufacturing before it sees initial revenue in 2016.

If Swift Tram is successful in helping public transportation rise above the fray, the ramifications could be significant. Metropolitan areas all over the world suffer from severe traffic congestion, and a cost effective solution that reduces travel time without adding to the ground-level footprint of transportation infrastructure has a lot of appeal. The array of approaches to suspended coaches that have come and gone without catching on provide a testament to the challenges Swift Tram faces, but if the company overcomes them it should find lots of riders who have been waiting for a better transportation option. Waiting in traffic jams, waiting for trains that aren’t scheduled to arrive for another 30 minutes, and waiting for buses that should have arrived 10 minutes ago.

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.

 

CO? Forestry: Investing in carbon reduction and sustainable forests

Guest Post by James Lester, Managing Consultant with Cleantech Finance

When investors, policy makers, and the media discuss the best ways of reducing greenhouse gas (GHG) emissions that cause climate change, most attention is paid to increasing renewable energy and reducing the usage of fossil fuels. A key driver of climate change that is often overlooked is tropical deforestation, which accounts for nearly 20 percent of global GHG emissions. These native forests act as global carbon sinks (they absorb carbon emitted by energy production), but rapid deforestation in tropical regions due to unsustainable timber harvesting, farming and livestock practices in developing countries have devastated natural forests, reducing the ability of the planet to absorb emitted GHGs.

CO? Forestry Corp, a Colorado-based developer of sustainable forestry and carbon offset projects, is addressing this critical area, a relatively low-cost target sector for emissions reduction. CO? Forestry is deploying investment capital to design, plant, and manage Brazilian eucalyptus timber assets, and develop marketable and verifiable carbon offsets for sale to strategic partners. Its founder, Reed Pritchard, has over 25 years of experience in commercial real estate and renewable energy project development. The company has purchased high quality, Verified Carbon Standard (VCS) carbon credits developed in the Peruvian Amazon and recently announced a partnership with Ride the Rockies, a hugely popular annual bike tour through the Colorado mountains. Ride the Rockies will use the carbon credits from CO? Forestry to offset its carbon footprint and highlight the tour’s sustainability efforts.

CO? Forestry is currently engaged in efforts to develop its own sustainable forestry projects that take advantage of the dramatic transformation occurring in the charcoal supply market. Approximately 55% of charcoal production in Brazil comes from logging native forests for the Brazilian steel industry with a value of over $500 million annually. Charcoal is one of the main sources of energy used in the production of pig iron for steel in Brazil. The vast majority of the current charcoal production is from unsustainable and often illegal harvest of native forests, leading to severe environmental degradation and deforestation. While there have been efforts to reduce unsustainable practices, institutional barriers have prevented wide adoption of sustainable forest plantations for charcoal. CO? Forestry’s business plan is poised to overcome these barriers.

CO? Forestry’s projects will help to replace native forest destruction with a renewable, more environmental friendly source of charcoal for iron ore reduction. In the Brazilian charcoal market, eucalyptus hardwood timber receives premium pricing and produces a better, faster, more consistent charcoal product than native forest timber and is less expensive than the alternative, imported coking coal. The company sees the additional income provided by the new area of carbon credits and carbon finance as having a significant impact on the barriers to sustainable development. CO? Forestry describes its sustainable forestry project in greater detail on its website.

CO? Forestry is proposing the development of a three-phase 24,000 acres plantation project with total development costs of approximately $45 million and 14 year project life. The company is currently seeking around $800,000 from investors to cover the upfront development costs and operating losses of the initial pilot project over the next 36 months. The income produced from the sale of both timber and carbon credits developed by CO? Forestry will create a long term, lower risk, stable investment return for CO? Forestry’s strategic partners, as well as other investors such as pension funds, college endowments and private individuals. According to Pritchard, an investment in CO? Forestry should appeal to the longer term investor looking for solid, stable, lower risk returns in the area of 20% IRR’s (unleveraged).

Brazil is one of the fastest growing markets worldwide with a rapidly expanding middle class demanding the building blocks (lumber and steel) of a developing economy.  A sustainable, local, and reliable, supply of carbon neutral charcoal provides a competitive cost advantage and hedge for the Brazilian steel industry. The resulting CO? Forestry carbon credits will be sold into the $576 million (2011) global voluntary carbon market. It should be noted that the potential growth of the market for carbon credits may soon expand as  international bodies along with the U.S. are currently discussing various policies to reduce carbon emissions from deforestation and forest degradation (also known as REDD).

Pritchard began the company because he sees a tremendous opportunity for himself and potential investors to realize significant investment returns as well as create a profitable, positive and significant change to the current trajectory of the planet’s carbon balance. If you are interested in learning more about the potential opportunity that sustainable forestry and carbon credits can provide, please contact Pritchard at rdpritchard@co2-forestry.com.

James Lester is a Managing Consultant at Cleantech Finance, which is an analytics group that reports on the intersection of finance, cleantech, and policy. James is an experienced author and has contributed to industry journals such as the Pew Center on Global Climate Change which is now called the Center for Climate and Energy Solutions.