Another good sign is the widely reported uptick in clean-tech investing in the second quarter.  Although early stage investing continues to be the best bet until economic visibility improves. Companies raising B & C rounds will still find it tough.  Funds from the US stimulus should also start flowing in this half of the year.

Bottom Line: Looks like tech is coming back, and green-tech will be a strong sector. But don't pop the champagne corks just yet - you will still need to conserve cash as we struggle out of this.

Recently I attended a Berkeley-Stanford Cleantech Conference on “Energy Storage: Enhancing the Value of Renewables”. The organizers put together a great event, although I would have liked to see more on competing technologies and real details on policy issues.  I can’t cover all the interesting conversation in this short post. Here is a short summary . . .  

The potential market looks attractive. Eric Wesoff of Green Tech Media presented a market estimate at $600 billion. Ed Cazalet of MegaWatt Storage Farms believes that California will need an additional 4GW of storage to meet demands of the 33% RPS in 2020. Nick Hodson of McKinsey said utilities would use storage if it was cheap enough, citing the example of Switzerland and Austria who have 11% and 17% storage capacity respectively, using pumped hydro.

The key words there are “cheap enough”. Haresh Kamath of EPRI drove that point home, saying the big three issues with existing technologies are cost, cost and cost. Although Ed Cazalet of MegaWatt Storage Farms believes that $/W comparisons on a “name plate” basis can be misleading because the fast response and peaking capacity of batteries meant that their real capacity could be double their name plate.

On the other hand, grid scale energy storage also competes with demand response and energy efficiency, which can be extremely cost effective, further underlining the importance of low cost.

As in much of cleantech, policy trumps technology (as pointed out by Eric). A key issue is the structural lack of ownership of the problems that storage will solve. Moreover, Ed pointed out, if utilities are allowed to include storage in their rate base that may skew the market against independent storage providers. The good news is that storage is now on the policy agenda and some US stimulus funds are on the way.

So where to invest? Marianne Wu of MDV was frustrated by limited research at grid scale, the small number of companies, and the small pool of talent which understands the technology and the market requirements and has experience in cost down and scaling.

Bottom Line: Personally I would advocate a back to basics approach on product-marketing and product management. Understand the customer requirements throughout the life cycle, match the technology to the most attractive market, and build for low cost. Talk to the operations people not the just the R&D department. The thought leaders can often help solidify and define customer requirements in a nascent market. Design for usability, manufacturability and cost from the start.

Foot note: GE just announced they are going to make NaS batteries at a new plant in Niskayuna, NY.

Well . . . on Monday I finally went to an event, entitled Demystifying the Stimulus Package, where the speakers actually knew what they were talking about. 

Congratulations to CalCEF for organizing a great event with knowledgeable and well researched presentations and panels. There are some reviews of the CalCEF event at Greentech Media here and here. 

I was interested to learn about the timetable. There is considerable pressure to start stimulating the economy and creating jobs quickly.  Most of the funds are to be spent over the next 2-3 years, but many programs extend beyond 2011.  According to Matt Rogers, the man at the DoE responsible for shovelling the money out the door, the timetable for obligating the money is: 

• Memorial Day (25 May) - 10% obligated
• Labor Day (7 Sep) - 50% obligated
• 30 Sep - 70% obligated

He also said that the first block of ARPA-E bids are due mid June with additional rounds in Q4 2009 and Q2 2010.

Meanwhile in California, the CEC is responsible for doling out much of the Federal money allocated to California. Martha Krebs of the CEC said solicitations were unlikely until August 2009.

Back in 2006 we sucessfully bid for $11 million in DoE funds for Zenergy/SC Power, after several attempts. I was also involved in previous PIER and DoE bids at Zenergy, Flextronics and my fuel cell company. We had some experienced partners and learned from our mistakes.

My advice?  

• Is government money is the right thing for you?
  • Do you have finance to meet the cost share?
  • Do you have the band-width to manage the project?
  • Can you handle the administration?
  • Will the 2-3 year program fit your R&D or product development cycle? 
• Build long-term relationships with DoE program staff.
• Take the opportunity to shape the programs before the FOA is issued.
• Partner with credible organisations.
• Understand the rules around foreign participation, but don't assume it can't be done.
• Address the selection criteria.
• Differentiate your bid.
• Don't leave it until the last moment.

 Bottom Line: Start early and pick your partners (including those consultants and attorneys) carefully.

Jeremy's direct style shines through.  My favourite quotes:

What are some of the most common mistakes you see aussie start-ups making?

Not thinking big enough. Focusing on technology instead of customer problems. Not looking for a global perspective in employees, leadership and investors early enough.

What do you think is stopping Australia from becoming a leading global tech-hub?

Market Size. Aussie companies need to look to global markets, and that means relocating closer to customers, so there is a limited runway that a company can have while based in Australia.

What advice would give an Aussie startup considering making the move to the US now?

The time to move to the US (or anywhere that is close to your markets) is when you’re ready to talk to customers. No need to move before that. But you must do it once you’re talking to customers. Otherwise, it is just too hard to stay top of mind as a startup.

What is the one bit of advice you would give a startup founder?

You can change your team, you can change your technology, but you can’t change your market.

Bottom Line: It won't take you long to read, but you will learn a lot.

Bottom Line: In assessing a CPV technology you need to consider both the target applications and the completeness of their design concept for that application - does the team have the expertise to make it work? 

It will be interesting to find out which technology they will use. The article says they would use "technology employed in the United States over the past 20 years" and build the plants by 2020.  Strictly interpreted, that limits the candidates to existing power tower and trough technologies.  It would not include home-town boy Ausra, who announced seperate discussions with Australian governments.

Bottom Line: US based solar thermal companies will be looking overseas to avoid the desert land grab in the US.  Look for more innovative technologies from Australia and other Asia-Pacific countries coming to the US for capital.

• The Bay Area is the world's fourth-most-important center for global business - after New York, London and Tokyo - as measured by the number of and revenues of Forbes Global 1000 companies.
• At $400 billion, the region's economy - if it were a nation - would be the world's 18th largest.
• Economic productivity is $122,000 per worker, 26% higher than the national average.
• 42 percent of the Bay Area's residents have college degrees.
• The region attracts 35 percent of all venture capital invested in the US (approx $10 billion).
• Very high venture capiltal invested per capita at $1,370, ahead of Singapore ($180), Israel ($117), New York ($107), Sweden ($101) and UK ($35).
• Bay Area universities attract 6% of national academic research funding (approx $2.5 billion).
• Foreign investment in the region grew 67 percent from 2002 to 2006.

The report calls for action to address some of the downside: a high cost of doing business, expensive housing, congested traffic (they should try Sydney), and a stressed education system. The report provides a lot more detail in comparison to other major world regional centres.

Interestingly, the high cost of doing business seems related mainly to salary and "benefits", i.e. payroll tax, health insurance, pension, and miscellaneous employee incentives. So partly that high productivity is being shared around, but also health costs (the US is almost double that of other developed nations as a % of GDP) must play a part.

Bottom Line: A great snapshot of the Bay Area, but read the report rather than the press summaries to get the real details.

From outside the US, the sensationalist, and not so sensationalist, media reports have relentlessly painted a grim picture of the US economy.  While commentators have been calling a recession for a long time, official stats have not yet reported the requisite two quarters of contraction. Although the Fed Chairman did warn of a possible "R" today.

The optimists are saying that the the damage is contained to finance and real estate, while growth in the rest of the world will soften the blow. Pessimists say the flow through to consumer spending will drag down the whole economy.

What is the impact on early stage companies? My reading of the mood is that, unless you are looking for a IPO or trying to raise debt, then stay on course but be disciplined. VentureBeat has a post that pulls together a variety of sources here.

Bottom Line: Glass half-full? Glass half-empty?

I was in Australia at the same time for the Australasian Cleantech Forum, so I could not attend the ANZA event. Nonetheless, I can report that my two weeks in Australia confirmed the level of innovation and desire to take on global markets.

I hope to see plenty of Aussie and Kiwi entrepreneurs heading to Silicon Valley soon.

Before Australian start-ups start flocking to Boulder Colorado to make their fortunes . . . I should provide a little perspective.

The article devotes considerable space to a program in Colorado called TechStars as an example of US angel investment activity. TechStars looks like a great program, organized by entrepreneurs and VC firms in Colorado, which provides up to $15,000 in cash, 3 months on-site mentoring, and an opportunity to pitch to local VC (all this in return for 5% of the company).

However, TechStars is by no means representative of the angel investor scene in the US. Rather it represents a relatively new approach which combines an incubator setting with a small amount of cash. Y Combinator is perhaps the best known example. They got started in 2005. Josh Catone lists nine similar "Seed Fund Incubators". They typically focus on web companies that require relatively little capital to get started.

Are they useful for overseas start-ups? First, bear in mind that these are designed for very early stage companies. Is this the right fit for your stage of development? To get an ideas you can read a post on the YC experience by Matt Maroon.

Practicalities: Do you have a US corporation? Are you authorized to work in US? Can you relocate and support yourself for many months after the program ends?

My second thought is: Why would anyone move from Australia to Boulder Colorado because they want to access Angel or VC tech investment? No offence to Boulder, they have a thriving community, but it would be like moving to Melbourne because you want to meet movie producers. If you want the "Hollywood" of tech investing then come to Silicon Valley.

Third and final thought: Will US Angels invest in overseas companies?  Strictly speaking, the chances are slim. The good news is that you can become a US company.  There are people and organizations here that can help you, regardless of your stage of development. There are even investors interested in helping you make the jump.

And of course, as Michelle Deaker notes in the original article, the government can help you with a little cash . . .

Bottom Line: I will put more information in a future post.