Re-imagining (and Re-tooling) Cleantech in Europe and beyond
Last week we hosted our 9th European Cleantech Forum, where we took on the task of “re-imagining cleantech”.
The event set new attendance records. Conventional wisdom would suggest that, in its ninth year and with the cleantech moniker out of fashion in investment circles, this event should show signs of being past its peak. And yet, the more committed and enlightened of you keep coming – our sincerest thanks for that – and more new faces, new companies and new countries are added to the delegate list each year. These included, this year, representatives from Brazil, Colombia, Mexico, and Peru.
So why is that? That is because, as my keynote called out, we only just started.
I argued that, although investment numbers may be down, the market for clean technology products is still in growth and, according to a 2012 Roland Berger/WWF report, has become as sizeable a global market as a number of long-established industrial segments.
I argued that it was not that we had got the power and inevitability of the mega-trends giving rise to this huge innovation opportunity wrong, but we had learnt, painfully, that there is no quick buck to be made (without a stroke of sheer luck) on a journey whose mission is to do sustainable business and create resource-efficient change within long-established, slow-moving, and deeply conservative and politicised industries. “You cannot win a race you cannot finish” was one of my favourite phrases that I heard in the sessions – this one from Stephan Dolezalek of VantagePoint.
I argued that, measured against the Innovation Adoption Lifecycle model, we were still in the early phase of the early majority of multi-national corporations joining what threatens to be, over the coming decades, the largest “open innovation” party the world has ever thrown – albeit the rule-book and the dance cards are still being written. Cleantech Group’s i3 data shows that, in both M&A and in minority equity investments, we are still seeing each year as many debutants (corporations we have not previously recorded as doing a cleantech deal before) as we are multiple deal-makers (such as an ABB who only this week announced their latest cleantech acquisition, that of Power One).
This in-flow of corporate debutants was visible at the Forum (with many new corporate names attending for the first time, taking their first steps in a long innovation journey) and visible in our recently released report. The (Continued) Rise of the Corporation in Cleantech Investment counted as many as 100 new corporate names doing equity investments into a private cleantech company in 2012. Many of these companies I have frankly never heard of before, lost as they are within specific B2B value-chains and originating from all over the world. All, however, are significant businesses in their own right, just getting started in understanding and reacting to mega-changes.
“We ain’t seen nothing yet” was the sub-title of my presentation. What I asked people for was a sense of perspective of how long change takes, how long it takes for industries to mature – the automobile, lighting and PC industries were all cited as examples where the outcomes and the winners were not obvious inside the first decade of the industry, but became so in the following two to four.
And I also made the case that if you were only to look at the health of the cleantech innovation theme (and the wide opportunity-set it represents) through venture and growth capital investment numbers, then yes indeed, you would conclude the peak is past, the trough is deep, and we are in decline. I showed the time-displaced overlay of VC’s plunge into the Internet vs its love-affair with Cleantech in North America, from the excellent “The State of Cleantech Venture Capital: what lies ahead” blog post by Matthew Nordan, to make two important points which often seem overlooked. One, that it was precisely in this down and corrective period of Internet investing that some of its greatest successes which are thrown at cleantechies as a ‘match that challenge’ were scored – for example, the founding of Facebook and the IPO of Google, both in 2004 (2015 in displaced cleantech-time). And two, that these businesses were not possible were it not for the countless billions invested in the prior 30 years to create the infrastructure of the connected world.
Our time has still to come, as the bubble gets corrected and smarter infrastructure is gradually put in place.
Further, I put it to the conference, that if we wanted to re-imagine a different cleantech world, that perhaps tracking the continued rise of strategic partnerships within the open cleantech innovation world might be a better lens through which to gain sight of a different pathway. One suggestion was to observe how biotech matured as an innovation theme over multiple decades, through the gradual and cumulative effect of inter-firm partnering around R&D (innovation). As my slide below concludes, I am not sure how we would determine where we are analogously against this picture, but we are early for sure. This might provide some perspective on how the journey has barely begun, and give us the inspiration and strength to stay with it.
We have it all to do and the opportunity is still in front of us. “Re-imagining Cleantech” was a call for people to stop and look at this theme again with different perspectives and fresh eyes – and with 2013 eyes. By the end of the event, I became convinced that it is not so much re-imagination that is required, as some re-tooling. The megatrends are still there; the technology is mostly there; the ecosystem is still there and players still arriving to enrich it further. We are now working out new approaches, models and forms of collaboration to navigate a very different 2010’s relative to the assumptions of the 2000’s. Learning some lessons of both the recent past and gaining some perspective from relevant history, however long ago, would be a good place to start.