Last week I went to the Cleantech Innovation Forum in London, at Kensington Olympia. The forum had a highly interactive format, with a series of discussion groups and pre-arranged one-on-one meetings, rather than the traditional format of presentation with networking coffee breaks. This proved to be pretty useful as a networking tool, although I found myself with an action-packed schedule!
A pre-published participant list was available online, giving details of who would be attending, with the opportunity to request one-on-one meetings with any participants in advance of the day. This simplified the task of identifying which delegates one particularly wishes to make contact with – which can often be a challenge during a 40 minute networking break at many events.
During the discussion groups which I attended, there was a great deal of debate around difficulties encountered by cleantech companies raising investment. The consensus seemed to be that there are issues with the way early stage companies are funded in the UK, Participants suggested that seed funding just doesn’t work in the UK, and as a result this kills innovation. Particular points were that companies either fail before they can attract VC finance, or else they have to give away too much of their company to get money and so end up over-diluted. The key culprit was deemed to be a shortage of grant money.
Additionally, it was perceived that the UK investors are very risk averse compared with the US model. People commented that venture funding is often available once companies no longer need it – investors can be queuing up once they are earning revenues – but not in the early risky days when it is so critical. More and more, there is a perception that VCs no longer want to finance seed round cleantech companies, but that only angels are investing. A further comment was that perhaps investors are becoming too reliant on copious amounts of data at the expense of gut feel, in order to de-risk the investment, which can also end up making the process overly lengthy and costly.
On the positive side, the feeling was that money in cleantech is getting smarter. That is, the investors who remain active are people who understand the market and technologies, while those who are less focussed on cleantech have fallen off the bandwagon. Additionally, when building the team ready for fundraising, there are a lot of creative and interesting people out there (more than there used to be), and surprisingly there are quite a lot of people out there who will work without a salary, for equity alone. This last point is critical, since investors focus on the team when making investment decisions, so if a company is lacking the right balance of skills it will need to address this if it wants to be successful at securing finance.
Overall, the day was enjoyable and useful – and well-attended despite being held on the day of the tube strike!
Lucy Butler is a senior consultant at TTP in the Carbon Trust – TTP incubator. She has prior experience in both management consultancy and life science research, and is trained in biology.
Tags: Cleantech, Finance, Venture Capital
