A new investment company will try to solve one of the most difficult challenges for energy startups: getting to scale.
Called Broadscale Group, the New York-based company will create a network of corporate investors in the power and utilities industry who are seeking out new energy technologies.
The idea is to make it more efficient for corporate investors to evaluate outside firms and to give smaller companies access to the manufacturing, marketing, and distribution expertise of established businesses.
The first corporate investors involved are General Electric, Duke Energy, and National Grid. Private equity companies Pegasus Capital Advisors will invest in deals identified by Broadscale. Pegasus invests in companies that seek to make more efficient use of natural resources.
Broadscale developed this model because the current situation isn’t good enough, says founder Andrew Shapiro. Clean-technology startups often flounder as they transition the company from product development to large-scale commercialization, often referred to as the "Valley of Death."
Energy, materials, and related fields are very unlike IT and Internet investing because clean technologies often require large amounts of capital to manufacture goods, they face powerful incumbents, and need to deal with complex regulations.
The scaling up situation hasn’t been helped by some venture capitalists moving out the field, making it tougher for small companies to find funding. At the same time, larger companies are becoming more active investors, partners, and potential customers. . .View Full Article
