Category: Blog

General Blog Discussion

The Art of Entrepreneurship – LACI Style

It’s not easy saving the planet from the precipice of imminent demise, and the nature of the challenge tends to attract a certain type of person – typically, they’re motivated by a lot of things in addition to money. Instead of desperately hoping for a desk at Goldman Sachs, those who just want to get rich are now heading to Silicon Valley / Beach to write apps and hope for a quick exit to Google / Facebook (can you hear the hollow echoes of empty Wall Street halls?). But cleantech entrepreneurs are colored with different (pin)stripes, they have souls and in addition to all wanting Teslas, they also are driven by the need for purpose and meaning.

When I ask people in cleantech why they do what they do, the most common answer I receive is that they want to make a difference, they want to help, they want to contribute positively. This may also be why cleantech has been so slow to deliver big returns, because philosophically inclined entrepreneurs often care more about solving a problem and doing good. Squeezing out the last ounce of return, growing at lightning speed and brutally conquering their competitors often are secondary considerations (which is also why they need the tough love doled out here, to keep that silly idealism at bay). In the end it sometimes means they’re more focused on the mission, which makes it take a bit longer to learn that you need to make money too to be effective at saving the universe. As Dan Pallotta eloquently describes, doing good but being miniscule is arguably less effective than being profitable and extremely powerful (and still doing good). But this purpose driven tenacity is also what means that cleantech won’t die, despite its naysayers. There are too many really smart and driven people that care very deeply about making our world a better place for them to just quit, give up and go away.

Fast Company ran an interesting article about what makes for good employees and successful companies, which in a nutshell is the intersection of “Passion, Pay and Purpose.” This holy triumvirate leads to fully engaged employees, which means that when you get up in the morning you’re really excited to come to work and do what you do all day long. A common refrain from some of the most successful people I know is “I love this so much I’d do it even if they didn’t pay me” (which, as it happens, for entrepreneurs is usually the case). In cleantech, Passion and Purpose are found in spades, and at LACI, our job is to shepherd the process intelligently so the Pay piece comes sooner rather than later.

Handsome urth

And who are these dedicated do gooders? What’s a day-in-the-life like in the coolest emerging startup scene in the intelligent universe? It starts at Handsome Coffee Roasters for a cuppa of the best coffee in LA, even if the off-the-chart hipster quotient can sometimes be over the top. Then breakfast at Urth Caffe before heading into the office for a few hours (plugging in my EV at the convenient charging station in front of the building).

wurstkuche tuna5

At lunch, a decadent noshing at Wurstkuche, alligator and rabbit brawts with a double order of fries and handmade curry ketchup, and because all work and no play make Jack a less compelling lad, a quick afternoon workout at Trojan Crossfit gets the blood flowing again and tees me up for a solid nose down session until the early evening comes. Since this is the Arts District and we are in LA, everything is better with a dash of style, so it’s off to Apolis for some fine local crafted lifestyle gear, then over to the Woori Market to grab some of the best, freshest, most reasonably price fish available. If I’m happening to get too myopic in my entrepreneurial efforts, the nearby Japanese American Museum reaquaints me with some balance. And when I finally close that Series A or sign that first big customer, it’s off to Bestia for hours of gustatory nirvana.

apolis apolis2

The LACI Effect: What makes LACI different from other cleantech incubators? Two words – substance & style. Although engineers like to deny it, aesthetics matter. A technology can’t merely do its job to achieve greatness, it has to move you as well, it has to evoke an appreciation for its form as well as its function. It’s not just that you do something, it’s how you do it as well, the harmonization of purpose and presentation. The grace of intention and image, the holism of the underlying elements and components and how they manifest in the experience of the object and its performance. SCI-ARC is right around the corner, Art Center is right up the road, we are anchored in a culture of design appreciation, some of the elements that being located in Los Angeles, in the heart of the Arts District bring to bear on the process.

sciarc best sci-arc-graduation-pavilion

For all the awesomeness that is the rebirth of the Arts District though, it’s still missing a world class tattoo studio. Guru Tattoo, which boasts the record of having the longest wait list in San Diego to get an appointment (over 2 years), is the renowned Pacific Beach shop owned and led by the inner-galactic explorer and long time friend, Aaron Della Vedova. I’ve been trying to convince him to open a shop up here for a couple of years so if you’re local and appreciate fine ink, ping him <<here>> and let him know we’re waiting for him to come north.

shop-header-guru

Otherwise, this place is about perfect. Abbott Kinney has officially been Googlified. Culver City is coming along, but doesn’t have the built infrastructure to enable a world class scene, but the heart of creative LA has undeniably shifted to downtown, and particularly to the raft of early 1900’s era brick and concrete buildings that line the LA river. It’s here, amongst the rebirth of creativity, that cleantech in southern California is making its home, in its own way, on its own terms. So come check it out, get inspired, do great things, find your groove and your style, make your own dent in the universe.

And we’ll provide the love…

New Cleantech Innovation Models – The Rebirth

phoenixThe most common plea from our portfolio companies is for help raising early stage capital, so I spend a disproportionate amount of time working on this issue, which also means watching how the cleantech space generally is evolving and here at the Incubator, experimenting with new models that are sustainable, profitable and repeatable. Sourcing seed or Series A investment isn’t an easy request to deliver on in the current environment and the fallout from the missteps and enthusiasm of the last 5 years of cleantech investing has been well documented, but there is good news. A consensus is emerging that we’re at the turning point in getting smart about how you build cleantech companies, which will begin to return the sector to the interest of investors. What’s up? Rob Day makes a good case for how the industry is evolving and maturing, which I think is spot on. Investors are smarter (or wiser at least), the ecosystem is more cooperatively aware (it pays to play nice with others), entrepreneurs are more experienced (even if somewhat singed) and the rumor mill abounds with stories of 2013 exits imminent, though whether this will just finally flush out the bad news or actually substantiate the mark-to-market and provide LPs some upside still remains to be seen.

Why is the cleantech nut so hard to crack? What are the issues that make cleantech different from other sectors? First, cleantech isn’t software/web/mobile – there are carbon, iron and lots of other atoms involved, not just electrons, neurons and caffeine, hence, pivots take much longer and are much more expensive. Second, products have a much longer timeline for commercialization (trudging across the valley of death) and the risk of the fundamental market dynamics changing by the time a company finally launches is significantly greater (<<insert your favorite cleantech roadkill here>>). Third, regulations and government have a disproportionate affect on market evolution, adding uncertainty and high variability (ITC wind credit), and finally, industry relationships, especially with incumbents, are much more critical to scale up (have you ever tried to sell into a utility?). So the challenge is, how do you deal with these issues in a way that brings competitive investment returns to the sector? And more specifically, how do early stage companies raise capital?

Here’s what we’re seeing from the front lines  in Los Angeles that show early signs of success:

  • Pull Versus Push: incumbent industry, utility and municipal players are becoming more proactive in seeking out solutions they need to address impending regulatory and sustainability issues and pulling them to market instead of relying on entrepreneurs to push products where they hope there’s a fit. This takes a whole bunch of inefficiencies out of the process: entrepreneurs have a much clearer view of real market economics, scope and sensitivities; industry gets the solution they’re looking for, instead of sifting through countless pitches from over the transom, and investors get innovation companies with built in technology validation and customer engagement. Much lower risk of failure. Much faster time to market. Much faster growth and exit. Everybody comes out ahead.
  • All Of The Above Approach: Investors targeting early stage cleantech companies are coming from an increasingly broad range of perspectives: crowdsourced high net worth, professional angels, double and triple bottom line venture funds, foundations, government (Fed, State and local), industry, family offices, incubator attached funds, and traditional venture capital.  Because of the social and environmental benefits connected to sustainability innovation, a much broader swathe of players are attracted to the space. This means many more avenues of funding for entrepreneurs, but also much more complication and effort required to work through the options. It’s not as simple as friends/family/angel – VC – PE – IPO/Acquisition, and complicating things, many of these players are new entrants in the last couple years and still getting their legs under them with regard to deploying capital at scale. The important thing though, is that there is a lot of creative thinking and exploration going on to figure out how to put capital to work.
  • Regional Coordination: However this occurs, whether by an incubator, an industry group, regional center, university or some other public/private partnership, an organization that smooths the interaction among all the players is essential. Entrepreneurs are always short on time, and new entrepreneurs in particular are short on experience and connections. A regional player that brings a virtual support team to get behind companies can vastly improve the odds of success. Think about how much time you spend searching for the right personal connection, think about how much effort it is to understand shifting market dynamics for your product or service, or early stage investment structures, or IP process, or HR issues, or design/branding/marketing on social media, etc. A well staffed and designed regional support center can save entrepreneurs untold hours and missteps by making the learning curve on all of the issues above much flatter. And time saved is money saved.

I’ll be diving into each of the topics above in greater detail over the next few weeks, but the take home message is this. There’s hope, things are improving, we’re probably past the worst of it, and those left standing and still focused on the space will likely see their efforts well rewarded over the next handful of years. Stay tuned and keep the faith, the rebirth is imminent….

 

Slash your utility bill with Chai Energy’s new “Summer Saver” iPhone app

LACI Portfolio Company Chai Energy launched a free new iPhone app – Summer Saver – that helps you easily cut your utility bill.

Chai Energy Summer Saver app

Chai smartly tied the app to So Cal Edison’s “Save Power Days” which encourages customers to use less electricity when there’s high demand on the grid.  With Chai’s Summer Saver app, you earn credits directly on your utility bill, saving up to $20 in a single day.

With reminders, predictions and savings tracking, what’s not to like?  If you’re a So Cal Edison customer, try it out today for free.

 

LA Cleantech Incubator is getting room to grow

Work is set to begin on the 3.2-acre La Kretz Innovation Campus in L.A.’s arts district, which will give the nonprofit 10 times more space to nurture start-ups…

Read the full story here.

Article by Catherine Green, Los Angeles Times

“We have access to the resources and the connections and the ability to use local government, yet we’re run by entrepreneurs,” said Fred Walti, executive director of the Los Angeles Cleantech Incubator. (Bob Chamberlin, Los Angeles Times / June 18, 2013)

“We have access to the resources and the connections and the ability to use local government, yet we’re run by entrepreneurs,” said Fred Walti, executive director of the Los Angeles Cleantech Incubator. (Bob Chamberlin, Los Angeles Times / June 18, 2013)