By guest authors Irina Patterson and Candice Arnold
Irina: How long do you usually prefer to hold a company in your investment portfolio?
Kiki: We’d like to hold it five years or less, but the market now is more of an eight-year hold. Depending on the product, some of these are being acquired much earlier.
For example, we have a great member in our organization, Dave Kaplan, who started V2Green, a Seattle startup that designs software and hardware to regulate and integrate electric vehicle charging onto a smart grid. It was purchased after two years by GridPoint in late 2008, less than two years after the startup [was created].
Dave Kaplan is now a very active member in our angel organization. He was an original Northwest Energy Angels member when it was founded in 2006, but he left to build this startup company, then he was able to sell it in two years.
Irina: At what stage do you prefer to invest?
Kiki: We usually get them after they’ve developed the prototype product, and they have a couple of beta customers. So, they are deploying the product and getting feedback.
Irina: Do you have a preference for the size of the total addressable market?
Kiki: I think that varies by each angel in our organization. Really, what we’re looking for is that our angel dollars, our capital, can help a company reach a nice profitable milestone, either for future rounds of funding or an acquisition.
Irina: Do you ever invest in small, $20 million niche markets?
Kiki: I think that depends on the individual angel’s perspective. Some like large markets, and some are OK with niche technology if they really believe in it.
Irina: Do you require entrepreneurs to have business experience?
Kiki: Ideally, they would have had several startup companies and successful exits. But that generally is not available, especially in cleantech, which is really a new area of expertise.
So, we have backed teams who are younger or less experienced, but we really like to see some team members have some of that exit and startup experience. The teams don’t have to be complete but, generally, we need more than just one entrepreneur with an idea.
Irina: What types of cleantech companies do you usually see?
Kiki: We see a lot of different technologies. We have on our website quite a few categories. We see the full array. [To name a few: alternative energy (solar, wind, geothermal, micro-hydro, tidal, wave, fuel cells, etc.); biofuels and waste-to-energy; energy storage (batteries, capacitors, hydrogen, etc.); energy efficiency and conservation (buildings, lighting, vehicles, insulation, etc.); smart grids; clean transportation (vehicles, charging, logistics, etc.) and others.]
Irina: What are the character traits of a promising entrepreneur?
Kiki: Resilience, and that they are committed and passionate about their product, but realistic about the chances of their startup company in the marketplace.
Irina: Do you do anything with the deals you’re not able to fund? Do you refer them to someone?
Kiki: For deals that are too early for us, we sometimes refer them to the Venture Tech Alliance. Sometimes we’ll identify that they had specific missing pieces in their proposition. If it’s easily identifiable, we’ll ask them to rectify that and possibly come back to us.
Even if I have not actually funded a company but many months afterward I see something that could apply to this company, I’d send the entrepreneur information and a link to a particular grant program or somebody who might be funding what he’s doing. We really try to help our entrepreneurs, even if we don’t fund them.
Irina: Are there a lot of grants for cleantech? What is the situation?
Kiki: Yes, there are a lot of grants available, and several of our companies have been able to secure these grants and build demonstration projects and further scale up their prototypes. It does seem like there’s a lot out there, but sometimes it’s hard to get.
Irina: What are the sources of the grants?
Kiki: Well, the grants now are coming from the Department of Energy (DOE) directly. Some of the money is flowing from the DOE through the states. States are doling these out in different ways through their different funds, energy efficiency type programs, smart grid type programs. There are science grants. There’s a whole array of grants.