Tuesday, August 14, 2007

Conversation with Warren Weiss from Foundation Captial

To continue to gain insight into how VCs are thinking about CleanTech, I spoke with Warren Weiss from Foundation Captial.

Executive Green: Since CleanTech is such a broad investment category, how do you focus your investment strategy?

Warren Weiss: We look at supply and demand.

For example, much of the investment activity in the energy sector today is focused on the supply side, or energy production (solar, biofuels, clean coal, etc.). Foundation Capital investments are focused on innovations on the demand side, or energy efficiency (smart grid, etc.).

Foundation Capital’s current investments: EnerNOC, eMeter, Silver Spring Networks.

EG: How does demand side investing fit with Foundation’s investment philosophy, and what do you see as big market drivers?

WW: Investments on the demand side are generally more capital efficient (lower capital requirements to get to market), and as a firm, we can leverage our IT expertise.

The market is being driven by corporate mandates to reduce carbon footprint and regulator initiatives to become more energy efficient.

There are huge untapped markets to make energy efficiency work on a large scale. Utilities need to leverage their data to gain more insight on how to better generate, manage, and deliver power.

EG: Is CleanTech investing overhyped?

WW: “CleanTech” as a term is overused to describe a diverse investment theme. As with the maturation of any investment category, there will be sectors that prove unsuccessful, which I hope will not hurt CT overall.

EG: Where have you learned the most from your energy investments?

WW: In two areas primarily:
Understanding sales distribution channels with utilities
A more in-depth understanding of how utilities rate recovery works

EG: What is your personal interest with CleanTech?

WW: We are in a very exciting market! Energy markets present a great opportunity to use IT to lower costs and improve operations. We invest in companies that offer consumers the ability to clean up the environment and do good for the planet.

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