Meeting a wildly successful and positive greentech investor is kind of like spotting a California Condor in the wild: you know they’re out there, but good luck on ever finding one. However, I recently caught a glimpse of one of these endangered species, and her name is Nancy Pfund, a longtime investor and founder of DBL Investors (stands for Double Bottom Line).
Yes, greentech insiders will already know Pfund, who joined JPMorgan in the mid-80’s and founded DBL, which was a spin-out of JPMorgan’s Bay Area Equity Fund I in January of 2008. And also, yes, I’m exaggerating on the endangered species bit (some funds have done O.K.) but for a lot of the greentech investors, it’s been truly hard to stay positive these days. Clean power and battery companies have had their fair share of bankruptcies in recent months, the Solyndra story has become a campaign slogan in an election year, some greentech funds have struggled to raise as much money as they’ve wanted, and still other generalist VCs have told me that they plan to give up on greentech investing altogether.
But that gloomy environment hasn’t had a dampening effect on Pfund, who told me in a recent interview that said she thinks now is one of the best times to invest in greentech startups. As a chunk of the investors are veering right (either getting out or cutting back), a small group of savvy investors will veer left and potentially be able to find overlooked early-stage disruptors. Pfund told me that some of the sectors she thinks are particularly interesting to put money into recently include consumer product green companies — like her fund’s investments in eco fashion company Maiyet, and sustainable packaging company Ecologic Brands — as well as building materials, and energy efficiency firms.
It’s not so difficult to stay positive when your fund has somehow managed to back the handful of truly rare greentech success story, and potentially budding success stories. DBL Investors was an early investor in electric car company Tesla Motors, which went public in the Summer of 2010, an investor in solar rooftop installer SolarCity, which is an IPO candidate and growing quickly, eMeter, which was bought by Siemens in December, solar installer PowerLight, which was bought by SunPower in 2007, and solar thermal company BrightSource Energy, which is also an IPO candidate. Seeing that many exits and potential exits in a single portfolio in greentech is like watching a California Condor land in your backyard: it just doesn’t happen.
Pfund says some of the firm’s success has been due to understanding the policy issues and public, private relationship. DBL worked with Tesla closely to help it secure a loan from the Department of Energy’s advanced technology vehicle manufacturing program. Knowing the long life cycles of energy companies, similar to investing in life sciences, is also important, says Pfund, who noted that it took PowerLight ten years to get acquired by SunPower (Pfund has also invested in life sciences). Finally, seeing the short-lived window of opportunity for a vertical, is crucial, too, and she pointed out that the time to back an electric car company or solar installer has probably sailed.
Pfund has also worked at promoting this positivity and led important industry research, like DBL’s first of its kind look at how much the government has given to energy sectors over the decades and how important this government support has been. As Pfund wrote in a column: “First, every great expansion of the American economy can be linked to the discovery of a new energy source. Second, each of these new energy industries received substantial government support at a pivotal time in its early growth.”
Within the investing community, of course, everyone knows Pfund. “Nancy and I have worked closely on several companies. She’s constructive and full of positive energy, experienced from her years of investing in this sector, and well-connected with a broad network,” says Ira Ehrenpreis, a General Partner with Technology Partners, who also invested in Tesla.
In addition to DBL’s solid track record in the past, 2012 could be a very good year for the company. If the IPO market heats up — everyone’s watching Facebook closely, says Pfund — then the firm could see BrightSource and SolarCity hit the public markets. Now, if we could just bottle what Pfund and DBL are doing and pass it around, maybe developing the next-generation of energy disruptors would get just a bit easier.
Image courtesy of GregtheBusker.