Venrock, the venture capital firm that was originally established as the venture arm of the Rockefeller family, is bulking up its cleantech team. On Monday, it announced that Matthew Nordan, co-founder and former president of Lux Research, will join as vice president with a focus on energy, environmental and material technologies.
In recent years, Venrock –- like so many other VC shops -– focused primarily on IT, investing in such stars as Apple and American Semiconductor. But recently the firm has been steadily ramping up its energy portfolio with investments in battery developer Boston Power, renewable gasoline maker Sapphire Energy, and Transonic Combustion, which builds technologies to make conventional automobiles run more efficiently.
Nordan’s addition to Venrock means the firm now has four professionals, out of a total of 25, focused on energy (for comparison’s sake, Kleiner Perkins lists 31 partners on its cleantech team). Under Nordan’s leadership, Lux Research, a business and economic advisory firm, grew into a well-recognized authority on emerging technologies, especially around energy and the environment. Besides his proven leadership ability, Nordan brings with him a wealth of knowledge and business connections. Given his new role as venture capitalist, we wanted to hear about both Nordan’s outlook for the industry and Venrock’s cleantech investment strategies.
Earth2Tech: Why did you make the jump from independent analyst to venture capitalist?
Matthew Nordan: The key thing I learned from my experience at Lux in studying the financing of environmental and energy technologies is that there is real need for new and big thinking. We need to move the needle on the big challenges of our day. There are a lot of ways to go about that. One way is creeping incrementalism; another approach is to make some big bets on new ideas. I think there is a huge need for that. The energy and environmental field has too much small thinking.
E2T: Will you have a particular focus at Venrock?
MN: We’re all doing a bit of everything. We have diverse and complimentary backgrounds. In my case, I’m particularly interested in resource bottlenecks. Some are obvious and everyone gets them –- (for example) moving around clean electrons and water distribution –- but there are a lot of resources that our world depends on that are less clear. They have severe supply constraints, and there are opportunities in finding substitutes and new solutions to the problems.
E2T: Does Venrock have plans to open a cleantech-dedicated fund?
MN: Energy is an increasing focus for the firm, but there is no dedicated cleantech fund. Instead, there are general funds that invest in different investment categories. That may change in the future.
E2T: What cleantech subsectors will Venrock focus on in coming years?
MN: It has less to do with targeting specific technology areas and more to do with targeting markets. There is a market for carbon mitigation, which can be served in many ways. There are crazy high science solutions as well as energy efficiency measures. The focus is more on prioritizing markets where there is exploding demand and then working backwards rather than the other way around. For example, every megawatt from a wind turbine contains hundreds of kilograms of neodymium. It doesn’t have any workable substitutes. If we are going to scale up wind dramatically, we need to find a new way to build a wind turbine or a substitute for neodymium.
E2T: Do you expect to see many cleantech IPOs or M&As in the next two or three years?
MN: Many people have impoverished themselves by trying to predict the IPO market. I think anyone who calls the how and why of giant energy IPOs is a fool and is presuming a greater ability to predict investor sentiment than actually exits. But the global market for water is roughly half a trillion dollars and for electricity about 1 trillion dollars. If you’re going to hitch your cart to a horse, there’s not a better one you can pick. In the long view, there is no other market with such a capacity to create the next Apples and Intels.