Clean tech prepares for robust year
Photo/Tim Greenway
Harry Brown, executive director of E2Tech, in the commons area outside his office in Portland's Peloton Labs
The executive director of the Energy and Environmental Council of Maine expects big things for the clean technology sector this year and, at a recent University of Southern Maine forum, encouraged Maine entrepreneurs to be ready for that.
Part of his enthusiasm was based on a RenewablesBiz story that reported that $9 million was invested in clean technology last year, a 13% increase over 2010. Mergers and acquisitions within the sector reached record highs, recording 391 deals worth $41.2 billion — a 153% increase over 2010 numbers. And new federal money has been earmarked to help clean tech entrepreneurs.
“We're hopeful that if those are the trends overall, that Maine will get a piece of that,” says Harry Brown, executive director of E2Tech, which sponsored the forum. The group attempts to bolster Maine's clean tech industry through networking, information, forums and special projects.
The forum intended to show clean technology entrepreneurs how to access capital to move their ideas into the marketplace and focused on three methods: traditional bank loans, grants and venture capital.
Moderator Karen West of the Small Business Innovation and Research and the Small Business Technology Transfer programs says investments in the clean tech sector rebounded last year to levels not seen in three years. Some industry insiders, such as the CleanTech Group, a global company that facilitates clean tech innovation through research and advisory services, believes this year will record the largest investments in clean technology. “(It's) very encouraging news,” she says.
The forum came at a convenient time for Maine's clean technology sector. Last fall, E2tech, the University of Maine and the New England Clean Energy Council created a Clean Tech Corridor project to attract clean energy investments in New England. The initiative is funded with a $1.3 million grant from the U.S. Department of Commerce to coordinate and streamline the network of existing clean tech enterprises. The goal is to make it easier for entrepreneurs to leverage expertise and capital, foster a closer connection between market demands and early innovations, and create a simplified connection between stakeholders and supporters.
The valley of death
More than 100 clean tech entrepreneurs attended the E2Tech forum, acquainting themselves with various sorts of financing, especially resources to get through what is commonly referred to as the “valley of death” — the time between completing successful R&D and putting a product on the market.
Betsy Biemann, president of Maine Technology Institute, presented her group's offerings, including $5,000 startup grants to conduct market research and develop a business plan, specifically designed to navigate the valley of death. The group also offers up to $25,000 in seed grants for R&D, she says.
“Clean tech is a sector that cuts across all of our sectors,” Biemann says. “Folks who engage us have a higher probability of getting funding than those who do not.”
Mike Finnegan, Coastal Enterprise Inc. senior vice president of lending, said their loans must pass the triple bottom line muster of economy, equity and environment. Sustainable agriculture and renewable energy are CEI's primary focus, he says.
Both organizations offer consulting services to solidify business plans, an important factor in mitigating risk for investors, lenders and the entrepreneur, says Stephen Lovejoy, a business counselor at the Maine Small Business Development Center. He urged entrepreneurs to engage a variety of lenders early in the process.
“Some people think [a business plan is] a hurdle [to clear] so you can get financing, but it's more than that,” Lovejoy says. “It is also an operational plan to keep you on task. … The plan is where you flesh out the ideas, where you really develop all of the issues you've got to face.”
Don Gooding of the Maine Angels, a group of 37 venture capitalists committed to investing around $100,000 over a five-year period in new business ventures, warned of the risks and rewards of venture capital.
Gooding says venture capital is only appropriate for innovators who are at the forefront of an emerging sector of the economy. Even then, the entrepreneur must be willing to accept venture capitalists as business partners, since they are awarded stocks. If a business is successful, the entrepreneur must be willing to sell the business, either through a public offering or outright to a larger corporation, he says.
“If you don't want to have partners helping you with your business, or you don't actually want to sell your company, then this [pool] of the big capital money market place isn't for you,” Gooding says.
To assess the size of Maine's clean tech sector, Brown says E2Tech will update its profile of the sector this year — something it hasn't done since 2006. Since then, there have been many new clean tech players, especially in the areas of biomass, wind and tidal energy. Finnegan says Maine has a “solar resource that we have just begun to tap.”
The financing forum was the best attended E2Tech forum to date, says Brown, an encouraging sign for the sector.
“Businesses are out there looking for capital,” he says.
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