Investing in cleantech — with subsectors that range from energy to IT to water — takes a good deal of focus. NGEN Partner’s Robert Koch knows it and he’s currently concentrating on solar startups and electric vehicle companies.
Focus also breeds enthusiasm. When talking about the firm’s investment in three-wheel luxury eco vehicle startup Venture Vehicles, he was surprisingly giddy: “That’s an awesome investment,” he exclaimed. Some day we’ll test out the ride, which he says compares to pedaling your bike down a hill at 40 miles per hour. Until then we’ll just have to trust him. Here are some excerpts from our chat with Koch:
A) We’re actually working on some, but haven’t done any yet. We’ve been negative on corn-based ethanol. We like biodiesel. We’ve emphasized other forms of energy generation. We just believe that solar is more scalable. You always have sunshine.
Q) So you would disagree with Vinod Khosla when it comes to biofuels?
A) I would not disagree with Vinod Khosla — we respect what he is doing. It is such a big space that you have to pick and choose your areas of competence. We have really deep domain expertise in solar and in materials, so it’s an easier fit. We’ve looked at a number of biofuels deals, but when you get into advanced biotechnology, other firms may be better at evaluating that than we are, frankly. So not to say that we are 100% materials-based, but it is certainly a competency that we leverage.
Q) What about your investment in Venture Vehicles? That’s a little unusual.
A) That is an awesome investment. And it is an incredibly fun company and product. It is analogous to riding your bike down a hill at 40 miles per hour. Some people have compared it to snowboarding. It is an exhilarating ride. It is eco, it is relatively inexpensive, and it’s practical. I’m on the list; they’ll be available in the second half of 2009. We’ll have prototypes in four or five months. We are really leveraging the reduced weight and therefore the battery can drive a lot farther than if you ordinarily had a heavier car.
Q) But how big of a business is a luxury three-wheeled vehicle?
A) Right, so we’re using the Mini as a proxy. The Mini sells approximately 25,000 cars a year now. It had a very quick ramp-up, and a high degree of customization. We’re looking at other investments in that space (electric vehicles) as well. And I actually talked to a company in that space yesterday. The car market is becoming very niche-oriented. In a good way. That makes it difficult for the big automakers, but it provides an excellent entry for startup car companies.
Q The firm has a history in water investments; what is your strategy there?
A) We’ve been an early player in the water space. But water is not an easy place for investment. It is a place that a lot of people talk about and few people act upon. We’ve been in our investments for awhile and we’ve learned an awful lot about the field. It is one of these classic scenarios where everyone knows the problem, but finding the appropriate solution and appropriate market channel and having a business be profitable is the challenge.
Owning the distribution of the channel is extremely important in terms of reaching the customer on the consumer level. We’ve also learned that the needs are very different in different places. In China and India, where there is an acute water shortage, having water has a much higher premium than in the U.S. It’s not a one-size-fits-all business model by any means.