Blog Post

Q&A Venrock's Cleantech VC, Matt Trevithick

trevithick.jpgMatt Trevithick, a VC helping lead Venrock’s cleantech investments, tells me to Google his name and I’ll find a distant relative – Richard Trevithick –- who invented the first working steam locomotive. I did; he does. Like his inventor ancestor, Trevithick, the venture investor, is driven to change the face of transportation — no less than help “make the internal combustion engine obsolete,” he says.

He has significant funds at his fingertips to attempt the task. Venrock’s latest fund is $600 million, of which Trevithick says the firm plans to invest 10 to 15 percent into cleantech. Before he joined Venrock, Trevithick spent four years investigating energy startup opportunities; before energy piqued his interest he founded and sold two software startups. Some of his firm’s current investments include lithium-ion battery company Boston Power, fuel cell startup Jadoo Power Systems, and Transonic Combustion, a startup trying to make the internal combustion engine more efficient.

My favorite parts of an hour-long interview with Trevithick? He draws a mean schematic, offering to draw one on practically any subject. He also seems not entirely convinced that the venture model is suited to the energy industry: “Venture investing is a highly constrained model. It only works for certain things. It has been demonstrated to work for IT and health care. For energy, it is still too early to tell.” Here’s edited excerpts of a conversation with Trevithick:

Q) When you look at the future of transportation, is it tied to the grid or is it biofuels?

A) People like better products. That sounds trite but if you look at different transportation products and the internal combustion engine, there are significant flaws. It is inherently not a great product. It’s an A+ fuel and a B- engine technology.

A better solution is an electric motor, because the torque characteristics are fantastic. You have much better acceleration and a higher top speed. The problem is that the fuel is not so good: the batteries don’t work well. The Achilles heel of this electric future is the electricity storage technology. Tesla can make an electric Ferrari, or something that can outperforms a Ferarri, because the motor is inherently better, but they can’t make it run very far or last a long time because the fuel is worse.

Q) Are you a Tesla customer?

A) No, I am not. For electric vehicles, I think there are three ways to make an impact in this transitionary time. The batteries are probably two generations away to where it is a mass-market, competitive product — 10 or 15 years away.

The question is what do you do in the meantime, while we’re waiting for batteries to get there? Transonic Combustion [Venrock’s portfolio company] is interesting because we are immediately making better use of the fuel without sacrificing performance.

The other interesting play is Tesla. You come down from the top. And that is certainly the history of the automobile; they start out as toys for rich people and got better. Or you can start from the bottom and improve things that appear to be toys today. Honda is the inspiration there.

Q) Last month in the WSJ, Martin Eberhard said that the top-down approach is the right move for an electric car company. Do you agree?

A) There are three ways. The top-down is only one approach. Never underestimate the bottom. Something that is really cheap and gets in the hands of many people can cause things to change. The third approach that might be viable is the fleet approach, for example electric taxi cabs in New York. That’s why liquid natural gas buses exist.

Going right for the heart of the car industry is a very hard approach. Some have proposed to sell an electric $40,000 to $60,000 luxury vehicle, which goes right for the jugular. I think, my God, that is the moist highly engineered and defended component of the car industry.

I’d watch out for a Think or the equivalent of the electric Yugo. For example DFC invested in Reva, an electric car company in India. I’d pay close attention to that. Imagine if a car cost $10,000, it was all electric and had just a pathetic performance. I could see it becoming a cult hit among college students. This is the story of the Model T and the Beatle.

Q). On that note, what do you think about Shai Agassi’s venture?

A) There’s several plans out there like this. The notion is if we only had $200 million or $500 million we’d be able to solve this problem. I told you my theory. I would not invest in that.

There are things that will make a difference, like material technology advances. For health care, for example, there is a less a question of market need, than what is the hard science to solve the problem? I think it is important for energy to do something similar. We know there is a need for this and the problems are persistent, so let’s invest in the hard science to really make an impact.

Q) You don’t have any pure biofuels plays. Why not?

A) We don’t, though the interesting thing is that we have a very strong biotech franchise. Vinod (Khosla) has the clearest plan. I admire his focus and I think that it is right. You would hate to be directionally right and bet on the wrong horse. Also you can’t minor in biofuels.

My passion is to find the transistor for energy. It would be something that is a technology advance that yields a technology improvement right out of the gate, but then has a 30-year development cycle that can really change the game for the better over a period of time.

An example could be what happens to these solar thermal plays. Or if we figure out a way to tap into nuclear energy in a way that did not produce radiation or harmful byproducts.

Q) Where do you find nuclear opportunities and startups?

A) That is very hard. Part of the challenge is finding technology that is developed anew. Not technology that has been derived from the bomb project. For nuclear we have to be much more proactive than that because there aren’t organized programs to study nuclear, for instance. Silicon Valley is highly optimized for software and semiconductors, and less so for energy. We have to work harder.

Venture investing is a highly constrained model. It only works for certain things. It has only been demonstrated to work for IT and health care. For energy it is still too early to tell. There aren’t that many returns. Even with the returns that have existed, like the EnerNOCs, these guys are more of an IT play.

Q) So you’re not sure if energy is a good place for VC?

A) It is a part of it. VC is good at investing in radical changes. Changes that are less radical are better done by corporates. Once the technology has been proven, the projects that are developed at scale are better done by the financing community.