Greenstart Managing Partner Mitch Lowe told me in a phone interview last week that Greenstart hopes to make 10 to 12 investments in early stage cleanweb companies in 2013, which he said in terms of the number of investments “sadly makes us one of the most active cleantech investors out there.” Greenstart has a small $7 million fund, half of which has been invested into 15 companies. Lowe says Greenstart will likely raise more money early next year for another fund.

Greenstart launched in the Spring of 2011, and since then has shifted its strategy a couple times. First, it dropped its focus on strictly cleantech startups — it’s original batch of startups included a biofuel company and a window efficiency coating company — and decided to only back cleanweb companies. Cleanweb is a term coined by investor Sunil Paul, to explain digital technologies that deal with managing resource constraints from energy to food to water.

Now Greenstart has dropped its accelerator model completely because the partners say the 3-month program wasn’t delivering the startups enough time, and it was too “one size fits all,” explained Lowe. Instead, Greenstart will work with the companies throughout their lifetime.

In addition, Greenstart is offering its companies in-house design services, and the fund now has 10 designers that will help startups build products, and design the user experience of their services. Increasingly venture firms have been launching design focuses and studios, as a way to work with designer founders, and to provides services to startups beyond just money.

Designer David Merkoski, who was formerly the Executive Creative Director at frog design in San Francisco, is leading Greenstart’s design studio. Merkoski tells me that Greenstart won’t just be helping startups with marketing and branding, but that they’ll be taking an IDEO-style approach to help startups think about their products and the experience of their users. IDEO is a two-decade-old design and consulting firm that pioneered “design thinking” as a method for product creation.

One thing that Greenstart won’t change is its focus on cleanweb companies, Lowe tells me, in response to my question of whether the theme of the fund could change down the road. Cleantech isn’t a hot area of investments in 2013, and in 2012 cleantech VC investments dropped by a third. But cleanweb investments are increasingly making up many of the cleantech investing happening these days, because the capital requirements are lower and the timelines to maturity are shorter (more like web and mobile companies).

But the firms that are still investing in cleantech hardware — like solar technologies, batteries and biofuels — see cleanweb as a move away from cleantech. Firms like Khosla Ventures, Lux Capital and Braemar Energy, which are some of the few still doing new early stage cleantech investing, aren’t being aggressive on cleanweb companies.

Whatever the definitions, expect to see cleantech and cleanweb investing continue to morph and evolve until the investors find something that works for them and the entrepreneurs that they back.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The fourth quarter of 2012 in cleantech
• Cleantech and investment in 2013
• The next generation of battery technology

On Thursday Facebook announced that it has acquired the talent of design firm Hot Studio. Facebook said it’s been working with Hot Studio for the past few months, and the acqui-hire follows in the footsteps of Facebook bringing in designers like Nick Felton, Mike Matas, and Nate Bolt.

Also on Thursday venture firm NEA announced the launch of NEA Studio, a 12-week program in New York for design founders of web and mobile startups. NEA said that during the program founders will work with designers and NEA portfolio companies, and the founders that excel will have the opportunity to work on launching a product and can use NEA’s workspace and receive a stipend.

The NEA news is similar to the announcement by Kleiner Perkins back in November that it is launching a design fellows program. Google Ventures has been aggressive on design work with its Design Studio, as has 500 Startups with their design fund and Greenstart with its in house designers.

Mobile apps, web products, and wearable connected devices are winning and losing based on the designed user experience and user interface of the product. Well-designed products like Path and Pinterest have emerged as leaders, while sites that haven’t evolved with good design haven’t.

Another aspect behind this trend is that the internet, mobile networks and computing are maturing, and the way regular people — not tech nerds and early adopters — interact with these technologies is fundamentally changing. Google and Apple both have their audio AI computing products — Google Now and Siri, respectively — and touch has started to become the de-facto standard for mobile devices.

At the SXSW Interactive festival this week, there seemed to be a greater presence of talks from designers and design founders than in previous years. During one such panel Tony Fadell, the CEO and founder of Nest, talked about how good design has always existed but has more recently, with the rise of Apple, become more democratized.

But designing a winning UX (user experience) for a targeted audience can be tricky, which is why designers are starting to be so highly coveted. On the SXSW panel, Fadell and Jawbone CEO Hosain Rahman talked about the importance of iteration and testing and Rahman said Jawbone’s connected wristband product UP had over 200 iterations. Still, the first version of the Jawbone UP flopped, and the company replaced those early versions with a version 2 of the product.

Wearables in particular can be tricky, as the world of computing hasn’t previously had to think much about the UX of the body. Google has reportedly started working with designer glasses company Warby Parker for the design of its Google Glass, augmented reality glasses.

We delved into some of these connected design topics at our second annual RoadMap event last year, and we think design is such an important trend that we plan to keep that conversation going throughout 2013. Our third annual RoadMap event will take place later this year in November.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Takeaways from mobile’s second quarter
• The state of cross-platform media measurement
• Social media in Q1: commerce and discovery dominated

That question was at the heart of my discussion with three cleantech investors at the VERGE Conference this week. I had the opportunity of getting to spend an hour chatting with Josh Green, partner with Mohr Davidow, Rodrigo Prudencio, Partner with Nth Power, and Mitch Lowe, partner with digital green accelerator Greenstart.

Lowe had a great quote at the beginning of our discussion: “Cleantech’s dead in the same way the Internet was dead in 2000.” Essentially, the work done in the late 90′s for the internet laid the foundation for today’s massive internet ecosystem, and for cleantech, Lowe thinks the last 8 years have similarly laid the foundation for the future of cleantech. Limited partners may not have seen terrific returns over the past 8 years, said Lowe, but he thinks we’re now entering an incredibly exciting time for investing in cleantech, and specifically for digital green technologies.

Check out the rest of the video, and hear our in-depth discussion on the future of cleantech innovation, entrepreneurs and investors.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Flash analysis: lessons from Solyndra’s fall
• Smart Grid Apps: Six Trends That Will Shape Grid Evolution
• Report: An Open Source Smart Grid Primer

GELI, or Growing Energy Labs Inc, has developed an operating system and set of software that can connect batteries for use on the power grid. Companies, building owners and utilities can buy the software and GELI-enabled batteries and use the batteries for services like providing energy storage for solar systems, or for things like storing and discharging energy when the demand for energy becomes out of balance with supply.

It’s still early days for smart grid battery services like this. Right now the grid has very little energy storage and power plants are basically producing the exact amount of energy that buildings and systems are consuming in real time. That makes the grid inefficient and costly. In the future when more clean power like solar and wind, as well as more electric vehicles, are added to the grid, more energy storage will be needed.

NIST has bought six “EOS Nodes,” which are computers with GELI’s operating system. NIST is going to connect the nodes to power converters and various battery systems and evaluate them for use in their Net Zero Home Project. For about a year now, NIST has been researching technologies that can make a home “net zero” or be able to produce and store as much energy as it consumes.

In GELI’s small lab and office space in the South of Market area of San Francisco, founder and CEO Ryan Wartena, and his team, have spent the last two years building large smart batteries that they call Energy Computers. While GELI is now focused on selling software, the company has ambitions to use its technology to usher in a vision of a smart “Internet of Energy” style power grid that has distributed, smart batteries running on their algorithms.

Home and building batteries are not as crazy as they might sound. Solar City recently unveiled in its IPO filing that it has 100 energy storage pilot projects, using batteries, under contract. In Japan, the market is just starting to emerge for batteries paired with home solar systems. At the smart grid conference Distributech early this year Panasonic was showing off a battery box that strings together hundreds of small format lithium-ion laptop batteries.

GELI recently went through the Greenstart program — a green digital accelerator in San Francisco — and raised a seed round through that program. Wartena told me earlier this year that GELI was looking to raise more money to kick off the business and start selling. GELI is an example of a so-called Clean Web company that uses information technology for cleantech aims. The Wall Street Journal reported this morning that a quarter of the investments that went into cleantech in 2011 went into Clean Web companies, compared to 15 percent in 2009.

In the same way that computers and the Internet have been shaped by storage, a connected energy system will need to rely on storage, too. The energy grid is currently a centralized system, where energy is created and distributed from a centralized location by utilities. But eventually energy could form into a decentralized network with solar rooftops and microgrids, not unlike the architecture of the Internet. GELI wants to provide the OS for that energy Internet.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Cleantech and investment in 2013
• Flash analysis: lessons from Solyndra’s fall
• Smart Grid Apps: Six Trends That Will Shape Grid Evolution

Each startup gets $115,000 and three months of marketing, design and business model guidance from Greenstart’s team. Previous startups that have gone through the program include the Android for battery startup GELI, and Scoot Networks, which makes an electric scooter sharing network. People Power has been around for a few years, and I’m interested to see how the Greenstart team tweaks their plans.

Earlier this year Greenstart restructured its program, and decided to focus solely on IT-based cleantech companies, and also boosted the size of its investment in the startups in its program. The pivot seemed like a good idea — early stage non-IT cleantech companies can be capital intensive to scale, can be difficult to vet without industry-specific experience, and also can take a long time to mature.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A 2011 Green IT Forecast
• Green IT’s Q4 Winners: Wind Power, Solar Power, Smart Energy
• 10 Greentech Companies to Watch in 2011

Founded in 2009, Smart Grid Billing is testing its combination of energy-monitoring wireless-connected plugs and software that collect and crunch energy consumption data. The service stores the data in a central server and can determine which appliance or equipment has the potential to reduce or cut its electricity use in real time.

This block of unused power can be sold to a local grid operator. Smart Grid Billing shares the revenue from that sale to its customers, and the plugs are programmed to restore the electricity flow back to the equipment at a later time.

The practice of dialing down or cutting energy use to reduce demand during peak hours of electricity use isn’t new. It’s called demand response, or energy time-shifting, and it’s more common place for commercial and industrial building owners.

But Smart Grid Billing is emerging to take advantage of a year-old ruling by the Federal Energy Regulatory Commission that requires grid operators to pay wholesale market prices for energy captured through demand-response programs. The idea of the ruling is to minimize the need for generating more power when grid operators and utilities could use demand-response programs to reduce consumption and maintain a balance of supply and demand in the process.

A utility’s demand-response program typically allows it to restrict electricity use to homes and businesses whenever it deems necessary, often during hot summer days, so that it can avoid blackouts or the need to buy expensive power to meet the high demand. Home and business owners get rebates or credits for participating in the programs, but they don’t usually know right away the amount of reduction that will be needed or have control over whether the restriction will cause them discomfort (for example, they can’t cool the house as much as they want).

Some large commercial or industrial operations have their own energy management programs to monitor and reduce energy use. In some cases, building managers or demand-response service providers have to decide a day ahead whether to shut down equipment in order to meet energy consumption goals because they don’t have two-way communication and good data crunching tools to make supply and demand decisions quickly.

But Smart Grid Billing’s service provides that live connection. “In real time, we know how many kilowatt hours will be used and electric prices, and we make a decision for all the devices we control and figure out how many megawatts we can move around and shift in real time,” said Henrik Westergaard, CEO of Smart Grid Billing.

To take full advantage of the demand-response market, automating data analysis, communication and decision-making processes will be critical. Making sure customers won’t experience discomfort or find their routines disrupted by time-shifting their energy use is important. Demand-response companies that also tout their real-time data analysis and speedy communication prowess include Comverge and EnerNOC.

Smart Grid Billing, which recently graduated from the San Francisco-based Greenstart incubator program, wants to sell its services to businesses first, and it’s starting a field trial at a golf course in Massachusetts this month.

The startup will be using its hardware and software to run a fleet of electric golf carts – it will delay charging them during the hours when wholesale electricity prices are high. Golf courses make for good customers because controlling their energy use is easier than controlling, say, a residential customer’s energy consumption. Controlling air conditioning and other appliances in a home is trickier because the curtailment could be noticeable and make the home uncomfortable for its inhabitants. One way to deal with that is to dial back energy use for a short period of time, say 10 minutes, and to do that every so often until a desirable, aggregated amount is achieved, Westergaard said.

Smart Grid Billing, which has been largely self-funded, is looking t raise $500,000 to prove its technology and service in field trials.

Image courtesy of LHOON via Flickr

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Smart Grid Apps: Six Trends That Will Shape Grid Evolution
• Green IT Q1: Cleantech Breaking Out — and Bracing for Hard Times
• Finding the Right Price for Demand Response in Energy Markets

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Cleantech third-quarter 2012
• Opportunities and risks in the share economy
• Ups and downs for cleantech in Q1

At the event at the Greenstart offices, five startups focused on using software to change energy and transportation, showed off their ideas to a packed house of hundreds of investors, potential partners and the media. The startups seemed as excited to present their ideas as the investors were to hear their pitches.

But just don’t call the crop of five companies greentech firms. There’s a lot investors that came to look at these five companies because they are just interested in technology and software, not necessarily in greentech, explained Greenstart partner Dave Graham to me. Greenstart shifted its strategy from incubating broad greentech companies last year to solely focusing on working with digital green companies this year.

And the move has paid off. Greentech or cleantech, as an investment class has a become a dirty word these days. There’s just been too many missteps and investors and entrepreneurs that have lost a lot of money. And, at the same time, there’s been a rush of web and mobile-focused folks that have started to make a real killing (Instagram). As I wrote in this article, I’m not even sure cleantech as an umbrella moniker will survive for too much longer.

However, the overarching trends of a growing population, constrained resources (energy, food and water), people moving to cities, and information technology as a way to manage these resources, won’t go away for decades. And the class of companies that presented at Greenstart’s Demo day all fit into this digital green description.

The digital green players

One of the most buzzy and fun ideas came from Scoot Networks, an electric scooter sharing network, which I covered last month, and which we’ll post a Green Overdrive show around this week. Scoot Networks is still in alpha phase, but is starting to roll out its e-scooter network to companies first (think big Internet companies and co-working spaces) as a way to test the concept and the market. Later on — and after they get the required insurance coverage — the company will eventually open up the network to everyone else, in the hopes of becoming the Zipcar for electric scooters.

Scoot Networks is looking to continue to raise a seed round of $700,000 (it’s raised $300,000 of that) and eventually wants to raise $5 million in a Series A round. The low cost of the electric scooters (they come from China), and the fact that they use an iPhone app as the bulk of their scooter control system (your phone fits snugly into the dashboard) means that Scoot Networks will have high margins, said Scoot CEO and co-founder Michael Keating during his presentation.

Another company that stood out was GELI (Growing Energy Labs Incorporated), which is developing software that can control and monitor batteries for the power grid — think the Android for batteries. The system can help companies and utilities make money off of using batteries for various applications like buying and selling energy, demand response, and energy load shifting. GELI is looking to raise a seed round of $750,000 to ship product to its first customers.

The other three companies that Greenstart picked and which pitched to investors on Wednesday included Ridepal, a startup organizing Google-style commuter buses for companies, kWhours, which has developed an iPad app for building energy efficiency professionals, and finally Smart Grid Billing, which makes software to enable real time pricing for utilities. Looks like “digital green,” “cleanweb,” “collaborative consumption,” “green IT,” or whatever people want to call it these days, is going to be the leading way that investors and entrepreneurs will be able to lead to more sustainable changes — and even make a little money.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Flash analysis: lessons from Solyndra’s fall
• Smart Grid Apps: Six Trends That Will Shape Grid Evolution
• Report: An Open Source Smart Grid Primer

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Connected world: the consumer technology revolution
• After Solyndra: analyzing the solar industry
• Green IT Overview, Q2 2010

The intersection between energy and IT could mean anything, from projects building smart grid applications to software for energy trading to analytics for the oil industry. Coburn explained to me that the latter could help oil producers seek resources more efficiently, in a safer way, and with a smaller environmental footprint. The overall goal of the startups that Surge brings into its fold will be to “create the efficient energy software technologies of tomorrow.”

Energy web

Investors and entrepreneurs have eagerly looked to embrace ways that energy, and other resources, can intersect with digital technologies. In addition to the unveiling of Surge this week, the Cleanweb Hackathon kicked off last weekend and enabled 14 teams to create web- and mobile-based applications to make the consumption of energy, water and food more sustainable. The winner of that hackathon was team TACO, which created a browser plug-in that adds in the total cost of energy associated with a gadget or appliance to a retailer’s website like Lowe’s.

Investors and entrepreneurs aren’t just moving toward what they see as an opportunity. They’re actively adjusting away from the capital-intensive business models and long-return timelines of companies in biofuels, clean power and electric cars.

Greentech has had its fair share of bruises lately, from Solyndra’s fall to a drop in venture capital to claims of “disaster” by prominent investors. Some green investors and entrepreneurs are hoping to make the greentech ecosystem look a lot more like the web by literally turning to the web. I like to call it the “searching for the next Opower” syndrome.

Surge details

Coburn tells me he’s a three-time entrepreneur who cut his teeth first at Dell and then the startup world. For his incubator he has brought in about 50 mentors that will offer business advice to the chosen startups, from venture capital firms like DFJ Mercury, Austin Ventures, Battery Ventures, Siemens Venture Capital, IBM’s VC arm and smart grid leaders like Bert Haskell from the Pecan Street Project.

Coburn says that the traditional energy sectors are entrenched and take a long time to change, and startups need to connect with mentors that have long roots in the energy industry. Coburn doesn’t have an energy background himself, which is why he’s created such an extensive mentor list. The mentors themselves are looking for deal flow, so to speak, or finding the next potential hot investment.

Like with Y Combinator, the investors in Surge will take something in return for their program and mentorship opportunity: about 6 percent equity.

A couple of months ago a group of entrepreneurial investors had a similar idea for a Y Combinator but wanted to focus on greentech (not just energy and IT). That project is called Greenstart, and it is led by Mitch Lowe, Dave Graham and Dillon McDonald.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• After Solyndra: analyzing the solar industry
• Cleantech and investment in 2013
• Ups and downs for cleantech in Q1