A group of 19 UK cleantech companies, on a UKTI sponsored Clean & Cool mission to San Francisco, are learning to speak VC

As Clean and Cool missionaries, we have been learning about the concepts of presentation and performance. The rules of “the game” were emphasised to us time and again. I am not sure how much of it is real. For example, some advice from the people who connect people to others: Don’t wear a tie, it makes you seem dishonest. Apparently, people in the UK are too buttoned up. Dress to impress and the VC “eco-system” can’t get you.
 
The highlight for three of the 19 UK companies on the mission was the opportunity to present at the CleanTech Forum. Aquamarine Power had the privilege of being one of the presenting companies. Unfortunately, two of us got landed in the 3:30 session, which was something of a graveyard shift.

CleanTech Forum is regarded as one of the premier eco-business events in the world. Many of the 27 companies presenting were seeking amounts of $5m or less. I don’t get it. Is that what the US VC community has become? A group of bottom-feeders looking to grab the next $5m investment in the hope of finding the next Google or Facebook? It appears that the US VC community is just as dead as the UK in terms of investment in real companies. Here is a typical conversation:

VC: So you are looking for $10m?
Entrepreneur: Yes, that will do it.
VC: We only do $5m over the life of the investment.
Entrepreneur: I see, well we could bring someone in alongside you.
VC: We want preference, 25 per cent of your company for $5m and a board seat. Are you revenue generative?
Entrepreneur: No.
VC: We only do revenue-generative businesses.
Entrepreneur: Are you a VC?
VC: No, actually, I am a Zen Tweetmaster.

In the “eco-system” there are lots of people who make their living from other people doing business. Eswar Mani from Masdar called these people “transaction parasites”. They include lawyers, accountants, investment bankers and clean-tech lobbyists. Stand still for a second and people who make money out of you raising money start to surround you.

It was also interesting that the US Department of Energy (DoE) came under some criticism over guaranteeing loans for cleantech companies. It seems that if the investment community does not step up then the government is willing to do so.  Some in the VC community were saying government shouldn’t pick winners. The main criticism was the risk to tax dollars. I suspect that that is not the real reason. Could it be that a little competition to the VC community is unwelcome?

The good news is that there are a couple of VC companies that like what we at Aquamarine Power are doing. The $40m to get to commercial is not too daunting. One VC likens itself to the contrarian—“we do the quirky things that others don’t”. The presence of several funds and corporate companies from Asia looking to invest in cleantech is also encouraging. They have money and want to get an early position in some of the emerging cleantech businesses.

The Clean & Cool Mission was a total immersion experience. The real value came from meetings set up around the events. For Aquamarine Power, these are continuing: I have decided to stay an extra few days in San Francisco for follow-up meetings. The UKTI team, led by Jaclyn Mason, are a phenomenally hard-working bunch. If you are considering doing anything on the west coast, this is the place to start.  

Highlights of the week included a visit to The Autodesk Gallery, a place where Autodesk and its customers showcase products created using Autodesk. It included a virtual mini-set from Avatar showing how James Cameron created his brilliant (if flawed) masterpiece. Also on show was a 3D TV (you see a 3D picture without glasses), which is amazing. Autodesk also has a programme to give its software to start-up companies to help them get up and running without the major expense of licences.

The pace of Clean & Cool was pretty hectic. If I was to change anything, it would be to allow some downtime to regroup, rest and follow-up with the contacts made. But if you get a chance to go on the next Cool & Clean Mission: grab it, grab it, grab it.

Martin McAdam is chief executive of Aquamarine Power. For more information about the Clean & Cool Mission, visit http://www.cleanandcoolmission.com/ or search #ccmission on Twitter