Want to hit it big in cleantech? Sign your Chief Financial Officer up for Mandarin lessons. “The hottest commodity today is a Chinese-speaking CFO with an MBA from an American school –- that person is worth a mint,” venture capitalist Steve Westly said this week at a conference sponsored by Silicon Valley law firm Cooley Godward, reports peHUB.
China offers a range of juicy opportunities for cleantech startups, driven in large part by what McKinsey & Company has described as “an extensive body of regulations and policies to raise the energy efficiency of many sectors,” helping to reduce the environmental consequences of rapid economic development and urbanization. Execs that can communicate with government officials and local partners in the country will have a distinct advantage in the race to meet demand for technologies that boost efficiency, reduce greenhouse gas emissions and other pollution, and help manage waste.
As Adura Systems founder and CEO Marv Bush told me earlier this year, if you’re planning to roll out a hybrid or electric vehicle fleet technology in China, it’s valuable to have the government on board. The country’s chief technical analysis group for vehicle technology, China Automotive Technology & Research Center, which sets standards for the industry and serves as a think tank for some government agencies, doesn’t function democratically, explained Bush, so it’s able to choose winners (companies and technologies) relatively quickly.
Chinese partnerships may also hold a key for companies hoping to sell into the U.S. market. That’s the strategy of electric car startup Coda Automotive. Headquartered in Santa Monica, Calif., Coda has worked closely with China’s Hafei Motor throughout the development process of its upcoming Coda Sedan, and the car will run on battery packs made in Tianjin, China by a new joint venture with battery cell giant Lishen.
The U.S.-China cleantech relationship goes both ways, of course, with some Chinese companies leveraging capital from U.S. investors. Most notably, plug-in car and battery maker BYD Auto snagged investment from a subsidiary of Warren Buffett’s Berkshire Hathaway last September. Chinese cleantech startups still garner a very small amount of venture investment, however. The Cleantech Group found that only 3 percent of the global total of cleantech venture investment in the third quarter of this year went to Chinese cleantech firms.
Westly’s firm, the Westly Group, has not announced any investments in China and does not have an office there. But the firm says it’s looking for Chinese companies to back with its new $100 million cleantech fund, announced last month.“No VC firm should be without a China strategy,” Westly said at the Cooley Godward event, noting that he goes to China every 90 days.
In addition, Westly said that “The number of Chinese companies going public in the next 10 years is immense.” That means venture capitalists need to figure out how to invest in Chinese cleantech now, while the market is still relatively nascent. A significant amount of the investment in Chinese cleantech firms comes from Chinese investors — in the most recent quarter the largest Chinese cleantech investment was for geothermal company Nobao Renewable Energy, which raised $25 million from Tsing Capital.