Submitted by Dan Sweeney on Thu, 2007-06-28 17:18.
GreenVest 2007 is the second so-called green tech investment conference I've attended this month. I didn't get around to reporting on the first one, but I guess I can't skip two in row and still keep my press credentials, so here goes.
GreenVest 2007 took place on June 26 and 27 in San Francisco at the Westin Hotel on Market Street and was hosted by Terrapinn, a trade show organization. I only attended the first day, but I trust that was enough to get the flavor of the event if not to be exposed to all of the accumulated wisdom of the venture capital presenters.
GreenVest consisted of a bunch of panel discussions, most of them back to back, and some scattered networking sessions where one might attempt to rub elbows with the lords and ladies of finance. Mostly these gentlefolk spoke only with one another, but occasionally bestowed a glance or a word on some individual within a considerable throng of hopeful entrepreneurs, all of whom had paid good money for a chance of making a mini pitch to some individual who, in the ordinary course of things, would not return emails or phone calls. The panelists were almost all financial guys, so one got a fairly uniform perspective on an industry that is otherwise largely lacking in uniformity.
The discussion touched upon a broad range of topics—what after all is a green technology and how many diverse categories might the term encompass—but alternative energy was definitely in the forefront and is clearly where most of the money is going.
The panelists all hailed from the larger institutions with concentrations in this area, including Draper Fisher Jurvetson; Mohr, Davidow Ventures; Jane Capital Partners; Nth Power; and Chrysalix Energy Venture Capital among others. What somewhat surprised me was the degree of expertise that most of these folks appeared to have in the area. My experience with venture capital was largely accumulated at the end of the last decade within the telecom sector, an era and a sector replete with gross hyperbole, foolish investments, and inane pronouncements on the "New Economy" uttered by members of the venture capital community who had been catapulted to sudden prominence and who were making and squandering literally trillions of dollars. For the most part then they were literally money drunk, and because most of them had never experienced a full blown bubble economy, they had little insight into the dynamics of the markets they were exploiting. It was the kind of episodic raging bull market that occurred with a certain predictable periodicity throughout the nineteenth century and up until Great Depression in the twentieth century, but was really rather rare and subdued in the post World War II period, perhaps because of the array of government constraints intended to damp market fluctuations that had come into play in the thirties. Only when Reagan began to weaken those constraints could the running of the bulls take place again.
Interestingly, the panelists kept returning to the question of whether green tech would bubble also, and most opined that it would. The fundamentals weren't entirely solid, the market was overheated, the return on investment was too long, the incumbent technologies were too strong, and so on, but, at the same time, all suggested that there were opportunities aplenty and lots of money to be made.
Panel discussions may be somewhat more lively than a succession of presenter monologues—although that is debatable—but they rarely allow a thought or an argument to be developed, and they almost never provide a comprehensive overview of any individual segment of an industry. In this respect the GreenVest panels were true to form. One heard a considerable number of interesting remarks, but one didn't walk away with a notion of how this or that new technology might fit into the overall energy industry. The one exception I encountered was a cogent discussion of the wind industry by Jan Paulin, president of Padoma Wind Power which operates a number of wind farms.
Another presenter who was well worth listening to was James Hansel, managing director of Eight Winds Capital. Hansel was the only panelist I heard who was willing to come to grips with the issue of conventional oil availability and oil prices. Hansel himself believes that information on oil reserves in the public domain is too unreliable to permit trustworthy predictions on the arrival of peak oil, and he therefore asserts that the alternative fuels investor confronts three possible mid term pricing scenarios, a return to sub forty dollar a barrel oil for the indefinite future, a prolonged period of fifty to eighty dollar per barrel pricing, or, worst case, some kind of oil panic which would result in prices escalating well beyond eighty dollars and staying in the stratosphere for some time. A panic, Hansel believes, would most likely be brought about by some violent interruption of oil flow into world markets from the Middle East—possibly a war, a co-ordinated terrorist attack, or a severe natural disaster such as a hurricane or tsunami.
Hansel thinks that scenario one might bring about a near collapse of the alternative fuels business, and that scenario two will provide a modest stimulus to investment, while scenario three would cause money to flood into the sector. He further believes that scenario one is rather unlikely, that scenario two is highly likely, and that scenario three is possible.
Implicit in Hansel's remarks is the notion that scarcity is a more compelling driver than environmental damage, and I think he's right.
One thing that struck me about the financial types in general was that they avoided hyping alternative energy. Everyone expressed doubt that alternatives would unseat conventional energy even decades from now. If there is alternative energy Coolaid to be imbibed, these guys were definitely on the wagon.
A final observation:
From my perspective trade shows and conventions are scarcely worth attending unless they present one with hitherto unrecognized business opportunities or alert one to the presence of pitfall beyond one's ken. My purpose in attending was largely to show the flag and alert more people to the existence of our journal. To me that's a very real business opportunity.
Maybe some of the entrepreneurs felt the same way. Maybe even the briefest contact with a financial decision maker will be enough to turn one's fortunes around. Maybe it's like getting discovered by the film industry in the nineteen forties at a booth in the soda fountain across the street from Hollywood High. One day you're down, the next day you're deified….
But for the venture guys themselves I wonder. If they shut most of the scruffy entrepreneurs out of their offices, why are they willing to pay money to endure their pitches? Is it just so they can hobnob with one another and hear each other make the same observations at the panel discussions? I wonder.
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