“Cleantech inside is the future,” forecasts Sheeraz Haji, CEO of the Cleantech Group. I totally agree with Sheeraz and like to call it: sustainable by default. The next wave is pervasive cleantech and ubiquitous sustainability management that will be adopted by every company in every sector. Of course, it will take time to make it real but the good news is that there are many smart green investors, startups and corporates working on it. This was obvious at the fantastic Cleantech Forum Europe 2012 which Sheeraz and his team organised this week in Munich. Before I share some of the general challenges VCs and startups are facing, let me brief you on the strategy of the Cleantech Group.

After events and advisory, i3 is the new growth baby

The Cleantech Group (CTG) was founded in 2002 by Nicholas Parker and Keith Raab who served as CEO until 2009. Sheeraz Haji took over as CEO in 2009 and raised $3 million from SAIL Capital Partners, Credit Suisse and Consensus Business Group. Nowadays, Cleantech Group is profitable, employs a team of 30 cleantech experts and focuses on events, advisory and the new market intelligence tool i3. i3 is their new growth baby because it scales better than human-powered consulting gigs or events.

In fact, i3 relies pretty much on crowd intelligence as startups, investors and corporates can upload their deals and partnerships to the platform. i3 uses the LinkedIn API to provide more information about the key people in each company. The result is a powerful market intelligence tool which is available for a license fee of $5K for the first user and $2.5K for each following user per account. While this is not yet a startup friendly pricing model, it looks like investors and corporates more readily value i3’s innovation insights according to CTG’s EVP Greg Neichin (photo below) who pitched i3 wholeheartedly on and off the stage.

Sitting on big dealflow data is pretty cool and rather tempting when it comes to finding new ways to leverage ROI. However, Sheeraz does not plan to raise his own VC fund as he prefers not to compete with his clients. It makes more sense to focus on the 3 existing businesses and grow them as much as possible, e.g. by automating the aggregation and distribution of market intelligence. Moreover, it is thinkable to add transactions in the future and turn i3 into an even more powerful marketplace for smart green innovation.

Overall, the Cleantech Forum in Munich was a big success and the Cleantech Group is well positioned to benefit from managing big data in the cleantech innovation industry. CTG’s MD in Europe and Asia is Richard Youngman (photo below) whom I want to thank for providing me with a press pass.

Without successful exits, it’s very tough to raise new funds

Zouk Capital is one of the few funds who managed to raise new capital in 2011. Alois Flatz (photo below) is a partner at Zouk and explained straight from the horse’s mouth why almost all GPs (General Partners) trying to raise new money from LPs (Limited Partners) are fighting windmills: without successful exits, it’s very tough to raise new funds. Period.

VCs have to work a lot harder on shortening holding periods and selling portfolio companies more quickly. How can this be done? The answer is not easy but obviously investors should reconsider their investment and startup growth strategies. It may be smarter to leave the scaling of production to corporates who are better at managing big factories and working with the best contract manufacturers on the planet. Another alternative for cleantech startups is to follow a fabless strategy – as was successfully proven by Novaled which recently filed for an IPO.

Kurt Kaltenegger of ABB Technology Ventures (photo below), who just invested in Takadu, proposed at Ecosummit 2012 in Berlin that a new partnership between VCs and CVCs (Corporate VCs) is needed and that average ROI multiples of 3 should be the target of cleantech investors. In other words, a new and more sustainable approach to cleantech venture capital is needed because without successful exits the whole model does not work.

Selling investees faster may result in lower returns, but not necessarily. A good example for the more realistic approach to cleantech investing is Rene Savelsberg, Partner at Chrysalix SET. Rene (photo below on the left) sold his stake in Epyon after 2.5 years and achieved a multiple that was even better than 3. In fact, this trade sale came at the right time for both the seller and the buyer. Epyon would not have been able to scale the production and financially guarantee big EV quick charging rollouts in the same way as ABB does. At the same time, ABB badly needed a product to satisfy the demand.

Crowd funding is good for cleantech, too

Sheeraz Haji and me also discussed the impact of crowd funding for cleantech. Obama’s new law allows crowdfunding rounds of up to $1 million from private investors without accreditation. This will definitely accelerate seed funding in all industries including cleantech. Check out platforms like AngelList, Ebay for business angels, and Kickstarter, mass donations for creatives, mix them with lean startup development strategies and a new approach to cleantech investing, and you can easily imagine that legalised crowdfunding is good for cleantech, too. I personally believe it will not only work for cleanweb projects mixing capital efficiency and fast software scalability, but also for cleantech founders who design and produce the real stuff, i.e. hardware.

While making good returns remains a challenge, cleantech is my lifetime task which I have chosen voluntarily to be part of the solution. Joining cleantech events is useful for learning from peers and networking like crazy to drive one’s own business forward. Let me leave you with a few more impressions from Cleantech Forum Europe 2012 which I highly recommend. See you soon in … you name it.

Tags: ABB Technology Ventures, Alois Flatz, AngelList, Chrysalix SET, Cleantech Crowdfunding, Cleantech Forum Europe, Cleantech Group, Consensus Business Group, Credit Suisse, Crowdfunding, Ecosummit 2012, Eypon, Greg Neichin, i3, Israel Cleantech Ventures, Jack Levy, Keith Raab, Kickstarter, Kurt Kaltenegger, Market Intelligence Tool, Munich, Nicholas Parker, Novaled, Pedro Miranda, Rene Savelsberg, Richard Youngman, Sheeraz Haji, Siemens, Takadu, Zouk Capital