Venture Capital and Cleantech: The Wrong Model for Energy Innovation

Gaddy, Benjamin E.; Sivaram, Varun; Jones, Timothy B.; Wayman, Libby

doi:10.2139/ssrn.2788919

Cited by 30 publications

(30 citation statements)

References 19 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Figure 2 shows the low returns for energy materials companies and resultant venture investment declines over the last 10 years. 19 Energy companies focused on materials/chemicals/processes (a parent category of battery startups) have returned only $123M for $764M (∼16%) invested over the 2004-2014 period (in other words, investors lost 84% of their invested capital). 19 As a result of this poor performance, in 2013 and 2014, chemical/materials/processes energy startups received less Figure 2.…”

Section: Comparisons To Pharmaceutical Industrymentioning

confidence: 99%

“…19 Energy companies focused on materials/chemicals/processes (a parent category of battery startups) have returned only $123M for $764M (∼16%) invested over the 2004-2014 period (in other words, investors lost 84% of their invested capital). 19 As a result of this poor performance, in 2013 and 2014, chemical/materials/processes energy startups received less Figure 2. U.S. battery and energy materials companies have underperformed venture expectations over the last ten years.…”

Section: Comparisons To Pharmaceutical Industrymentioning

confidence: 99%

“…18 As a result, Cleantech investment in energy materials/chemical/processes has declined, representing <30% of Cleantech investment dollars in 2014. 19 than 30% of the Cleantech investment dollars and represent only ∼30% of Cleantech companies receiving investment at all. 19 Given such discouraging outcomes, we look to characterize the status quo and provide some suggestions to improve investment returns in the future.…”

Section: Comparisons To Pharmaceutical Industrymentioning

confidence: 99%

See 2 more Smart Citations

Applying insights from the pharma innovation model to battery commercialization—pros, cons, and pitfalls

Hanson

Mayekar²,

Dravid

2017

MRS Energy & Sustainability

View full text Add to dashboard Cite

IntroductionBetter batteries are critical to the world's clean energy future. Achieving more economical and efficient rechargeable energy storage (<$125 kilowatt-hour 1 ) would enable long-range electric vehicles (EVs) to economically compete with gasoline cars, 2 a key step in electrifying transportation and reducing the transportation sector's 1/4 share of U.S. CO 2 emissions. 3 Improved energy storage can help balance an intermittent electricity load, allowing more intermittent renewable energy generation sources to come online. 4 Improving battery technology is instrumental to achieving these goals. Rechargeable, energy-dense batteries were made possible in 1991, with the introduction of lithium-ion batteries by Sony. 5 The lithium-ion battery's rechargeable nature and eventual higher energy density allowed for the design, manufacture, and sale of entirely new classes of devices. Based on this energy density, lithium-ion batteries are the current battery technology of choice for EVs and most consumer electronics. 6 Further improving lithium-ion battery performance is a crucial enabler to achieve the outlined sustainability goals. ABSTRACT Lessons from the pharmaceutical industry's commercialization successes can be identified and applied to the U.S. battery industry to potentially improve its discouragingly low startup success rates.A carbon-neutral and sustainable society of the future necessitates the widespread use of battery technologies that are efficient, effective, and economical. Lower-cost and more energy-dense battery technology can help solve many of our energy challenges, such as balancing the intermittency problems of renewables and making possible electric transportation fleets. New advanced materials are crucial to such battery advances. However, bringing advanced energy materials to market in the United States remains a formidable challenge. Hurdles include high upfront capital requirements, long timelines to success, and few opportunities for technology risk-reduction. Such challenges impede startups from developing financially viable technologies. Consequently, recent advances in battery performance have come from incremental changes implemented by large companies. By contrast, the pharmaceutical industry has many similar technical challenges, yet has an established pipeline of U.S. startup successes. We review and compare the current market structures of battery and pharma innovation. We propose an updated model of U.S. battery commercialization, informed by the pharma model's successes. The new approach's benefits and potential pitfalls are discussed. We provide recommendations for entrepreneurs, investors, manufacturers, and policy makers to improve the battery innovation ecosystem. We hope that these ideas spur the battery community to more successfully commercialize and deploy transformative technologies.

show abstract

Section: Comparisons To Pharmaceutical Industrymentioning

confidence: 99%

Section: Comparisons To Pharmaceutical Industrymentioning

confidence: 99%

Section: Comparisons To Pharmaceutical Industrymentioning

confidence: 99%

See 1 more Smart Citation

Applying insights from the pharma innovation model to battery commercialization—pros, cons, and pitfalls

Hanson

Mayekar²,

Dravid

2017

MRS Energy & Sustainability

View full text Add to dashboard Cite

show abstract

“…Patient capital through long-term venture capital (VC) -notably present in ventures such as Bill Gates' Breakthrough Energy Coalition -could be offered by the SWFs to fund local initiatives and overcome some of the problems that have historically plagued VC investments in the space (as outlined in Gaddy et al, 2016). Non-SWF actors can be involved as well;…”

Section: (Iii) Thinking Outside the Box: Consider Innovations And Bromentioning

confidence: 99%

Financing renewable electricity in the resource-rich countries of the Middle East and North Africa

Krupa¹,

Poudineh²

2017

View full text Add to dashboard Cite

“…However, only limited investment from the private sector is shown. A recent study done by Gaddy et al lends further support to Mazzucato's argument by revealing that either due to technology risk or lower margins venture capital (VC) firms tend not to invest heavily in the cleantech sector(Gaddy, Sivaram, and O'Sullivan 2016).Gaddy et al argue that VCs are more suited to invest in software firms as they require lower capital and come with a promise of higher returns. In contrast, much of cleantech is capital intensive and has a long lead time before VCs can…”

mentioning

confidence: 95%

Teaching an Old Dog New Tricks: Identifying Policy and Regulatory Barriers in Microgrid Adoption

Chahal¹

View full text Add to dashboard Cite

The electricity sector is poised to be a powerful enabler towards creating a low carbon economy. The Ontario government began instituting policies to achieve emissions reductions through programs like the Feed in Tariff. The initial policy framework advocated for a specific tool (renewable generation) to achieve its inferred mandate of reducing carbon emissions and codified these programs in legislation. As more technologies evolved additional policy prescriptions were created to integrate them; these include smart grid integration and energy storage procurement. The fundamental environmental objectives of reducing emissions were not mentioned in the creation of these policies. Ontario is now faced with a patchwork of policy tools that cannot value disruptive technologies like microgrids because the current electricity markets that could leverage them were designed to be compartmentalized and do not value emissions reductions. This thesis uses two examples of integrating microgrids in Ontario to highlight the challenges created by the current policy framework. This thesis argues that while the Ontario government has invested in creating tools to deploy some new technologies like renewable generation, without thoughtful reform it will be unable to effectively realize an environmental return on its investments.3

show abstract

Venture Capital and Cleantech: The Wrong Model for Energy Innovation

Cited by 30 publications

References 19 publications

Applying insights from the pharma innovation model to battery commercialization—pros, cons, and pitfalls

Applying insights from the pharma innovation model to battery commercialization—pros, cons, and pitfalls

Financing renewable electricity in the resource-rich countries of the Middle East and North Africa

Teaching an Old Dog New Tricks: Identifying Policy and Regulatory Barriers in Microgrid Adoption

Contact Info

Product

Resources

About