Corporations: The Latest VCs to Get in on Cleantech?

Coca-Cola, Boeing, Sodexo Looking for Cleantech Innovators

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At the Cleantech San Francisco Forum today, market research firm The Cleantech Group announced a $3.2 million round of funding. That in and of itself isn’t all that interesting, but what the group plans to do with the money is: It plans to focus on connecting corporations with the research and advice they need to adopt new green technologies and connect with cleantech startups.

When venture capital fell off a cliff last year, the government stepped in and its efforts, in turn, helped to bring some private investment back to the cleantech space. There’s still a financial drought, however, so startups are increasingly looking to big corporations that might be interested in purchasing their technology, product or, in some cases, company. Perhaps more importantly, corporations are equally as eager to find cutting-edge technologies.

At a panel this morning, executives from Coca-Cola, Sodexo, Duke Energy and Boeing discussed what they’re looking for and the pros and cons of the relationship between corporations and startups — from both sides.

On the corporate front, these aren’t early-stage investors, so they hate to waste time and money on unproven technology.

From a start-up’s point of view, interest from a big corporation is fantastic until the reality of an endless pilot phase sets in — something panel moderator and Cleantech Group President Sheeraz Haji calls “death by pilot.”

The benefits of cooperation could outweigh the risks for both parties, though: Corporations get access to new technology without having to make major investments in research and development, and start-ups get access to capital and a big name to throw around in press releases (Bloom Energy, for example).

With that in mind, startup CEOs listening to the panel were furiously scribbling notes as Ed Getty, Coca-Cola’s head of external technology acquisition, said his company plans to encourage open innovation by listing on its web site the sorts of technologies it’s looking for (namely those that help it reduce water and energy use).

Chris Smith, director of operations for Boeing’s IDS Energy Solutions, said he wants to talk to companies with interesting new technologies and that Boeing will build an 11,000 square-foot smart grid center in St. Louis this year to test new technologies. Boeing’s interest in smart grid increased when the defense side of its business began to dip. Its relationship with the government that may have helped it secure three Department of Energy grants for smart grid projects.

“The future requires a lot of different technologies, but it’s the foundation that’s most important, and that’s what we’re focusing on,” Smith said. “Security, in particular, remains a big issue, as it is with anything that is connected to the network. So if you’ve got a new technology that fits into that, come and find me. We want to talk to you.”

CEOs and venture capitalists were equally excited when Arlin Wasserman, vice president of sustainability and corporate social responsibility for food service company Sodexo, announced his companies needs: technologies that help reduce water use and preserve soil nutrients in agriculture, and a way to better drill down into a complex supply chain in order to pinpoint which suppliers are operating most sustainably and reward them for it.

Corporate-financed innovation can’t supplant other financing, though. It solves pressing business issues, but not necessarily pressing environmental issues. And with research funding for universities at an all-time low, the future is not looking bright for research that is necessary but not lucrative.

In fact, Haji was asked about the state of funding for early-stage companies and he said it’s looking grim.

“The revolution is paused,” he said, and later added, “With the exception of Vinod Khosla, who flat-out tells people he’s funding science experiments, you’re not really seeing any early-stage investment right now.”


See also:

Businesses Tap into Social Networking Site to Strategize Away Carbon Emissions

Cleantech Investing Drops 33% in 2009, But Recovery Hope Grows

Five Big Surprises on the Global Cleantech 100 List