At Green:Net today, venture capitalists said that there was opportunity for money to be made by companies focusing on metering and smart grid technologies. But they also identified some other opportunities. Tom Baruch, founder and managing director of CMEA Capital, said there were some obvious areas for investment, including metering and the smart grid. But he said he found some less obvious areas of investment interesting, like materials discovery. Lee Burrows, partner of VantagePoint Venture Partners, said he saw some interesting opportunities for investment in lighting controls and the back end and management software for multitenant buildings.
The VCs agreed that, while the greentech community would certainly welcome a blockbuster IPO, the lack of a particularly strong public offering to this point wasn’t necessarily a deterrent to future investment. “Wall Street’s pretty sophisticated and analysts will judge each of these opportunities on its own merits,” Warren Weiss, general partner of Foundation Capital, said.
And Baruch said that one key difference in public companies in the sector now is that, for the most part, they were either profitable or on their way to profitability.”The companies that have come out so far are pretty solid companies…The key word is profit. The street is looking for profit, and I think it’s important that these early IPOs are in a position to be profitable in a reasonable time frame.”
Following on a question posed to Vinod Khosla in a previous discussion, moderator Paul Kedrosky asked the VCs how they perceived investments in capital-intensive greentech projects. Weiss said that his firm tends to avoid them, in part because he focuses on the demand side of the business.
Baruch said some investment in pricier projects was needed. “There are going to be capital-intensive investments. You can’t avoid the because the energy business is so huge, and much of the industry is scale-intensive. You can’t get there without scale and you can’t scale without capital,” Baruch said.