Where has the vast majority of cleantech venture capital funding flowed over the last decade? The answer is "trillion dollar markets" such as electricity, fuels, chemicals and building materials. Several prominent cleantech VCs have proclaimed that the immense size of these opportunities offset the investment realities of time, significant CAPEX and entry barriers. Indeed these are massive markets that dwarf the size of cloud computing, SaaS, mobile and social media. But unlike these traditional VC segments, these are commodity markets where the public markets and corporate M&A departments are not used to paying the high margin and rapid growth multiples that have become the foundation of venture capital funding success.
People often ask us, "Where does Pangaea find all its deals?" The answer is quite proprietary: We've developed channels to over 120 universities and research centers; we are reading patents daily; we follow the work of individual researchers sometimes for years before engaging with an eye to invest. The key is that we generate the majority of our dealflow proactively, and with good reason.
Water – it is touched by technology in so many ways from pond (or aquifer, lake, ocean etc.) to tap and back again. Continued innovation helps us to remediate our waste; clean up accidents/spills more effectively, reduce the energy footprint of water treatment and provide distributed water in regions where infrastructure is lacking.
Demand for clean fresh water continues to grow and is estimated to increase by more than 40% by 2030. Any industry with such spectacular growth and opportunity for technology innovation demands a closer look – and at Pangaea Ventures, we have been looking closely for a number of years and made our first water investment in 2003. Also, the fact that water is essentially a perfect good and is a necessity for life doesn't hurt either.
It is often said that an ideal market for venture investing is a large market on the verge of massive disruption. It is for this reason that the medical imaging market recently came onto my radar. It is a multi-billion dollar market that is on the verge of massive technology and market disruption.
The core technology for radiation-based medical imaging cameras are scintillators. This detector technology was first adopted around 1985 and is comprised of scintillator crystals that convert x-rays and radiation into visible light and a photodiode or photomultiplier tube that converts the light to an electric signal. Sounds like old technology.
The advanced materials industrial value chain incorporates activities that range from securing input materials to transformation processes into output products with all the supporting functions. Not just intermediate products for additional conversion but all the way to the final product in the hands of the end user. Primary activities include raw materials management, production processes, intermediate products and end-user products. This in turn involves a large array of support tasks, such as supplier control, product design, engineering, research and development, testing and quality management, product qualification, marketing and sales, regulatory compliance, life cycle management, and customer satisfaction. It should be noted that the concept of value chain management received a lot of attention following Michael Porter’s seminal work on "Competitive Advantage: Creating and Sustaining superior Performance". For over a decade, Pangaea Ventures has been building advanced material startup companies and this experience has allowed us to establish some best practice approaches that include industrial value chain management.
In the past, we typically only thought of the term “harvesting” in relation to agriculture. Perhaps that was a simpler time, before Big Data allowed us to “harvest” great insights for example. At its root (pun intended), harvesting is all about gathering something of value. That something is almost limitless: corn, vibrations, wheat, wasted heat, tomatoes, phone records, fish, etc. More and more, people are looking towards harvesting various forms of energy to improve lives, both present and future, human and battery. As we continually strive to increase energy efficiency and reduce waste, a wide variety of energy conversion and energy harvesting techniques are being explored and developed. Unlike traditional energy generation, which usually requires inputs that cost money (oil, coal, natural gas), energy harvesting generates usable electricity with “free” energy sources already present in the operating environment.
Early stage advanced materials companies are most often born with a healthy dose of science in their DNA. However, as these companies evolve from the lab to the commercial world, the art of business must be genetically engineered in. In our experience working with early stage advanced materials companies, focus is one of the most delicate genes to effectively insert. Focus is a true art: On the one hand, there is a temptation to meddle in every possible application. On on the other, there is the repeated message to do one thing and do it well. The reality is that the key to building an important and valuable company usually lies somewhere in between.
Move over spider silk – there’s a new fiber in town!
Is it possible that the latest ‘wonder material’ has been under our noses the whole time? Could it really be derived from the most abundant organic polymer on earth, requiring only sunlight and water as production inputs? It sure seems that way. To paraphrase a friend of mine (out of context): Mother Nature has been innovating for billions of years and probably has it figured out.
In 1968, William Gaud, director of the United States Agency for International Development (USAID) coined "the Green Revolution" as a term for the massive impact new technologies were having on agriculture: Synthetic fertilizers, hybrid crops, improved irrigation and the introduction of synthetic pesticides. The Green Revolution had actually begun twenty-five years earlier in Mexico with the work of Norman Borlaug, and established an era where crop yields would increase by 50% per decade.