It’s about speed, scale and making money, GE’s CEO Jeff Immelt told me in an exclusive interview in reference to GE’s $200 million smart grid fund that it unveiled on Tuesday at a splashy media event at the Bentley Reserve in downtown San Francisco. GE plans to offer up $100 million, with its venture capitalist partners doling out another $100 million, that will be invested into startups that have built the latest cutting edge smart grid technology.
While GE is no stranger to investing in greentech innovation — it’s poured some $175 million into 21 greentech companies and $5 billion into its own energy R&D — GE and its VC partners plan to identify their smart grid opportunities over the next 10 weeks. That gives entrepreneurs and startups only between now and mid-September to submit their ideas and plans to get access to the fund via GE’s website.
I asked Immelt why does GE and its VC partners, which includes Kleiner Perkins, Foundation Capital, Rockport Capital and Emerald Technology Ventures, feel the need to move so fast when finding these smart grid partners? Particularly in light of the fact that a time crunch potentially rushed the allocation of the stimulus funds for the smart grid as well as the DOE loan guarantees.
Immelt said there are two reasons for the fast pace: GE is already well-involved in developing smart grid technology and has launched several products in the area including smart meters, smart appliances, an electric vehicle charger and home energy management products. Basically, GE is ready to collaborate and find partners now. Secondly, unlike with the DOE grants, loans and loan guarantees, which need to go through a lengthy peer review process, GE isn’t looking to spur innovations across the market. It’s looking to make money and help boost its own product portfolio. That type of review process is a whole lot shorter.
The group is initially offering innovators the chance to win five “smart grid challenge awards” of $100,000 each, and is asking for ideas in three areas: renewables, grid and eco-buidlings. In that respect, it’s almost like the X Prize competitions. But for GE, the smart grid “challenge” could actually lead to more substantial equity investments and potentially M&A opportunities for GE, said Immelt. “There’s a chance we will be able to do much bigger stakes,” said Immelt.
At the end of the day, why would GE want to bring in the VCs? Immelt said to me that he thinks startups feel more comfortable working with some of these investors that can do more hands-on work and who know the smart grid market intimately. GE can often times be so large that it’s a bit unwieldy and clumsy, said Immelt.
But I think there’s another important way that VCs can help GE. VCs can more easily vet the companies and ideas that come in, helping guide GE on what is cutting edge and what isn’t, and can identify what would be an important startup to put more money into. GE has co-invested with all of the venture capitalists it’s working with on the smart grid challenge in the past, explained Immelt.
Beyond GE’s smart grid challenge Immelt told me he is very bullish on GE’s Ecomagination products, which generate 20 percent of GE’s revenues right now, and he expects a bigger pipeline in the future. GE has already pledged to double its R&D budget for energy over the next five years.
The most important thing that can happen to boost greentech and the smart grid is “to put a price on carbon,” said Immelt to me. In addition, if the public utilities commissions found a better way to get energy efficiency devices and services financed so that they would have a faster return on investment for businesses and consumers, it would help the smart grid market considerably, said Immelt.
The one thing Immelt would change if he had to do the whole Ecomagination thing over again? He’d move the marketing away from greentech, which he thinks sounds a bit “elitist.” Immelt sees GE as a working persons company and suggested a more blue-collar alternative: “digital energy.”
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Image courtesy of GE.