Looking Ahead: Our New Approach To Cleantech Investing
This letter from Clean Energy Trust CEO Erik G. Birkerts reflects on where the Organization has come from and the launch of the 501vc™ Investment Program. Originally posted on the CET blog on November 29, 2017, it remains relevant today, so we thoughts we’d share it with our Medium audience.
Dear Friends and Supporters:
Many of you may have read the recent New York Times article titled As Silicon Valley Gets ‘Crazy,’ Midwest Beckons Tech Investors. At a time when most headlines leave me feeling empty, this one gave me hope. It shines a light on something we at Clean Energy Trust have known for a long time — the Midwest has terrific untapped potential, what “amounts to an undervalued asset, rich in markets, new business ideas and budding entrepreneurs.”
Lest I get too exuberant, the article also pinpoints the significant startup challenge we face in the region: three-quarters of all venture capital invested in America goes to California, New York, and Massachusetts and less than 10 percent is invested in the Midwest region. The picture darkens significantly if one isolates venture capital investment in the cleantech sector.
OUR MISSION & PURPOSE
Now entering our eighth year, Clean Energy Trust’s mission and purpose has never been more clear and important. We are supporting emerging cleantech entrepreneurs and startups in the Midwest, helping to build vibrant businesses that create jobs and better the environment. Realizing that attacking the capital gap that confronts cleantech startups is one of the most impactful roles we can play, we are making seed investments in high potential companies and then working side-by-side with these startups to help them scale.
We began making small seed investments in 2014 and since that time we have invested $3.8 million in 23 companies. Some interesting metrics we’ve collected along the way:
- 48% of our portfolio companies received their first investment from Clean Energy Trust;
- Our portfolio companies have gone forward to raise $53 million in follow-on funding post our initial investment;
- 39% of our portfolio companies are based on university intellectual property;
- 68% have female or minority founders;
- 30% have 1st or 2nd generation immigrant founders;
- 68% are generating revenues, with 22% recognizing greater than $1 million in annual sales and all remain in business; and
- We have profitably “exited” 1 investment, with two additional transactions pending, demonstrating that our “revolving” fund model is beginning to work with investment returns recycled for investments in future startups.
We have captured these results in our recently published Report to Stakeholders. Please take a few minutes to read this and learn more about Clean Energy Trust.
WHAT LIES AHEAD
Looking towards the future, we need to make more investments and provide greater support to the valuable cleantech innovation that is taking place in the region.
We need your support to do so as we rely on your grants and contributions. Will you consider supporting our work?
REDESIGNING THE CLEAN ENERGY TRUST CHALLENGE
One new development we are excited about is the redesign and rebranding of The Clean Energy Trust Challenge. What began in 2011 as a business plan competition in which winning teams received grants from Clean Energy Trust, the Challenge has evolved into our investment platform. Beginning in 2014 we transitioned from awarding grants to making equity investments in the winning teams. We strengthened our evaluation processes and assembled an accomplished Investment Committee to help us make prudent investments. In the spirit of continuous improvement, we’ve recognized we can do more and this is driving the redesign that lies ahead in 2018.
501vc™ INVESTMENT PROGRAM
We are shifting away from a “pitch competition” format towards a more professional investment process. As such, our investment activities will now be known as the Clean Energy Trust 501vc™ Investment Program, reflecting the fact that our work marries the attributes of a not-for-profit organization with those of a venture capital firm.
The 2018 501vc™ Investment Program will invest a total of $1 million again in 4 to 5 high-potential cleantech startups. And, we’re excited that a portion of these investment funds will be from positive proceeds we’ve earned on past investments!
Beyond the importance of the capital itself, we’ve learned that our decisions to invest send powerful signals to the market that help our companies raise additional money. To ensure this signal stays strong, we are dedicating more time to our investment prospects to learn about their businesses and their inspiring founders. We will go even more in-depth in our due diligence and afford our Investment Committee time to meet with and learn about the startups face-to-face well in advance of our new May event.
The 501vc™ Investment Program will culminate on May 23, 2018 at Co_Invest Cleantech, our new annual event, in which we will unveil our 2018 investments. Co_Invest Cleantech will still feature presentations by our new portfolio companies, ample Q&A with the startup teams (including enhanced audience participation), thought provoking keynote speakers, and terrific networking.
As part of our 501vc™ Investment Program, investment decisions will now be made beforehand to ensure we have ample time for deliberation and debate, and then unveiled at Co_Invest Cleantech. This is different than in past years when final decisions were made at the event with only a short window of time for deliberation. Recognizing that part of the magic of the Challenge was the competition between the teams, we will maintain this excitement by having our newly announced portfolio companies compete for additional investment dollars decided by the Co_Invest Cleantech audience at the event.
We’re confident that this new approach will ultimately benefit our companies. With a more rigorous process that identifies the most promising startups in the region, more investors, corporations and other stakeholders will be drawn to Chicago in May to see “the best of the Midwest.” Please join us on May 23rd to be part of our new approach!
In closing, allow me to again make a request. As the end of the year approaches, please make a contribution to help us better support the bright minds and the world changing ideas coming out of the Midwest. Your support of Clean Energy Trust will not only make Co_Invest Cleantech a success but will also enable us to partner closely with these companies in the years ahead to help them achieve the success they deserve.
Thank you for your support of Clean Energy Trust, the Midwest and the cleantech sector overall.
We’re excited for the future!
Erik G. Birkerts
Chief Executive Officer
Clean Energy Trust