How to green our region's innovation network

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David Kenney is president and executive director of the Oregon Built Environment and Sustainable Technologies Center known as Oregon BEST.

As co-awardees of the first federal EDA i6 Challenge grant focused on accelerating technology commercialization, we at Oregon BEST have been reflecting on our region's resources for entrepreneurs in the built environment and sustainable technologies sectors. What we've come to recognize is that while our region has a strong set of resources for commercialization, the expertise has largely come from the IT and software sectors, making for a sometimes awkward translation to cleantech.

To radically improve our state's success at turning our strengths in green building and renewable energy into innovative new products and services, we need to improve the support services for these unique cleantech sectors. We need to provide information and training to our regional angel investors to make them more comfortable stepping into unfamiliar territory. We'll be talking about this at the Oregon BEST FEST ’11 on September 12th in Portland, where we hope entrepreneurs, business leaders, angel investors, government agency staff and university researchers will participate in collaborative brainstorming about how best to accelerate commercialization within Oregon's cleantech sector.

So what makes clean technology different? Here are the three areas I see the most significant differences between high tech and cleantech from an entrepreneurship and investment perspective:

• Regulatory environment. While the personal computer, Internet, Web 2.0 and other information technologies developed in a largely unregulated environment, clean energy solutions operate in or close to the highly regulated energy industry. Federal and state laws and public utility commissions provide heavy oversight. Water technologies also live in their own world of regulations, and building codes impact the requirements of many energy efficiency or water saving technologies integrated into the built environment. This regulatory climate fundamentally changes the speed and ease with which new clean technologies can go to market.
• Market dynamics. Purchasing decisions for new technologies in the utility industry are often based on financial models that look at decades worth of use from a new piece of equipment — think about hydroelectric dams or transmission lines — not the three to five years that a computer server or Web technology might provide value. Also, driven by the regulations referenced above, purchases of clean energy technologies are often mandated by renewable portfolio standards, federal/state/local incentives or building construction financial models developed decades ago. The value proposition for some clean technologies comes from a combination of cost savings, new revenue streams and the difficult-to-price environmental and carbon mitigation contributions of a product or service.
• Capital needs. Unlike software, most clean technologies need to be transformed into products that must be manufactured — often using processes that haven't been proven at large scale and that can't readily be outsourced to contract manufacturers. Angel and venture investors have historically shied away from startups that require a large capital investment to achieve financial success.

When competing head-to-head for private investment dollars from local investors, clean tech faces a big challenge. So what is the solution? Create a whole new entrepreneurship and investment infrastructure specifically for this sector?

I don’t think so.

Rather than start from scratch, I think we need to use the resources we already have in place. Our existing entrepreneurship networks and incubators — including the Oregon Entrepreneurs Network, the Oregon Technology Business Center in Beaverton, Portland State University’s Business Accelerator, the Sustainable Valley Technology Group in Medford, the Tech Alliance of Central Oregon,TiE Oregon, MIPO, etc. — along with the growing number of angel investor networks in central Oregon, the gorge, southern Oregon, the Willamette Valley and Portland, have deep experience in the fundamentals of starting technology-based businesses focused on high-growth markets requiring risk capital.

All of this is just too much relevant, valuable expertise to pass up.

Let's help these organizations and networks learn about clean energy and green building technologies, business challenges, and financing needs. I have talked with many of the individuals in these organizations, they are interested in participating in this effort.

Here are some ideas for getting this started:

• Hold information sessions targeted at angel investors to increase their understanding of cleantech market dynamics, regulatory environments, capital needs and industry trends. These information sessions will be tied to investor network activities to increase visibility and attendance.
• Offer due diligence support to angel groups evaluating clean tech deals. The support could help connect investors to the resources needed for due diligence, such as information (websites, articles, industry reports) and meetings with appropriate technical and business experts.
• Assist entrepreneur support organizations to connect investors with promising technology companies following a preliminary vetting of their viability and interest to the investors. The resulting increased deal flow would also increase investor interest in attending informational sessions as described above.

Oregon BEST is working to begin implementing some of these ideas, and we would welcome new ideas and partners in this effort.

Joining with others, we can collectively accelerate the success of turning innovative new ideas and research into products, services and companies that are addressing some of our world's most pressing energy and environmental challenges, while launching ventures that will create jobs and contribute to our region's economic prosperity.