Eco Connect Innovation forum 16.4.13 @ Walker Morris.

The focus of the evenings event was investment in cleantech; taking a look at the current state of the market, the government’s role in ‘priming the pump’ and a look at the perceived hotspots in the investment market.√جª¬ø

The second Eco Connect forum of the year took place at the Leeds offices Walker Morris with a strong and varied panel who gave their initial thoughts on the current market position.

 Moderated by specialist barrister Jeremy Barnett,Catherine Hokin from Eco Connect introduced the panellists Catherine and explained that  although the sector was vibrant with a predicted 5% growth rate to 2015 only 30 deals out of 1000 have been done in cleantech this year. Catherine felt that the secret of success is innovation, and talked about the recent successful Cleantech Innovate event where 90 applications for funding were whittled down to 40 candidates in four categories, all of whom presented to a live audience of investors and other professionals.

Mike Dunn from Iona Capital who is a specialist in wastewater treatment and solid waste Anerobic Digestion, looking to invest in tranches of £3m – £9m per project, with recent projects being Local Authority AD plants in Wales.√جª¬ø

Mike began with an experienced view of the current state of the investment market, which he described as being fragmented. Surprisingly, he felt that the UK Governments policy driver has been effective from a Venture Capital perspective, as the main driver is certainty of income streams which the Government is alive to. Mike felt that the biggest problem is the quality of projects that are coming through and the sheer volume of varied applications that are being made for different projects.

Simon Pringle is Head of Sustainability and Cleantech for BDO LLP.  Previously, Simon was a Partner within a global management consultancy and winner of the Management Consultancy Association award for Corporate Responsibility.  Before this role he was a senior Director of one the world’s largest energy and environment businesses.  Simon serves on a number of industry boards and is a Non Executive Director with two Private Equity funds focussing on investments in renewable energy projects.√جª¬ø

Simon explained that it was important to create the bridge between the corporate drivers and cleantech, bearing down into supply chains. He felt that there is a new environment for innovation with the regulatory rules setting theboundaries to encourage certainty of income streams, a must for VC investment. He explained the difference between technical and commercial innovation and felt that entrepenurs  have to look to find the appropriate gap in the market in order to obtain funding.

Dr Tim Foxon is a Reader in Sustainability & Innovation in the Sustainability Research Institute, School of Earth and Environment at the University of Leeds. He is a Research Councils UK Academic Fellow (2007-12), and a member of the ESRC Centre for Climate Change Economics and Policy and the new Centre for Integrated Energy Research at Leeds.

Tim’s research focuses on innovation systems and processes for a transition to a low carbon economy. He is a co-investigator on research examining Transition pathways to a low carbon economy, supported by EPSRC and E.On UK, as well as on an EPSRC project on future energy decision making for cities, and leader of an ESRC research seminar series on Complexity economics for sustainability.

Tim gave his perspective on the drivers for system change, in particular meeting the climate change targets. The big challenge is the appropriate roles of government to achieve the low carbon economy and the tension between technology push and market pull. He explained that the investment decision considered risks and rewards, including regulatory risk, system risk and policy instruments such as the new Energy Bill.

Tim explained what he called ‘the trilemma’  between the desires to move towards the low carbon economy, energy security and affordability. He concluded that going forward, to comply with the stringent targets beyond 2030, gas has an important role and should we need to move to more provision of backup and energy storage. √جª¬ø√جª¬ø√جª¬ø√جª¬ø√جª¬ø

Sam Cockerill, CEO Libertine FPE which is a technology start-up that is developing a sub 100k free piston converter that can make electrical power that is 1/3 more effective than tradition generators. The concept is a novel embodiment of a proven, low cost, high efficiency engine format. Libertine FPE will make power from biogas commercially viable at tens of thousands of agricultural sites that are presently sub-scale.

Sam gave a fascinating history of his career that led him to start up entrepreneur, as an engineer specialising in refigeration, ground source pumps and latterly the I development of motor racing engines for Cosworth. He then took an MBA then became a consultant for Bain, moving to turn round a potato supply company by growing revenue on the back of waste.

Sam said he is very keen on ethananol and talked about the available in Brazil on the forecourt and the difficulties in the market as engines have to take both types of fuel. He moved on to talk about his own experience in attracting funding, having raised £700k  from a mix of friends and family, grant sources – Carbon Trust and TSB and a new investment round. In his view the investor needs expertise , the key to a successful investment is to find the right teams, a theme that was echoed by other panellists.

Jeremy than asked the panelists for their views on which markets are the current ‘hot spots’ for Venture investment. Mike explained that Iona Capital tend to look for infrastructure projects and want to be an ‘informed investor’. It is important to realised that in smaller raisings, transaction costs are high early stage seed corn investment can be expensive. He felt that the best approach for a start up was togo through intermediaries who can bring a suitable proposal to the attention of the right person.

The panel were asked about the attitude of investors to the risk of regulatory change. Simon felt that an investment decision is easier in a market that is already regulated market – more money is going to demand side management for example  WEE  which is driven by regulation, giving a degree of certainty that is require.

Sam gave an interesting insight into the Biofuels market having being involved with Ensis that received £200m funding in 2008. He felt that the idea that policy risk can be brushed of is naive of the government and that the GIB should be underwriting policy risk but as people remarked, it won’t do so because its such a risk!

Sam felt that investment in second generation technologies that reduce ghg emmissions is not happening in the UK at present. When asked about algae bio fuels he explained as an example that Shell have a pragamtic approach and due to recent investments in theromchemcial  their alagae based projects may have been pulled.  He explained that such an investment has to be scaleable and can be very expensive , thus demonstrating that old fashioned agriculture is very cost effective.

Mike talked about the privatisation of Kinetic and how there was a feeling that innovation had been somewhat reduced following the recent sell off. He believed that the current market is interested in small biomas infrastructure deals such as schools wanting to heat the swimming pools, social housing etc.

Simon remarked on the difference in approach between EU and USA, where cleantech investment seems to be less risk averse. Here there is a sense that people overpromise and undedeliver, this is where there is a need to improve. He felt that the interesting spaces are resource recovery, better building products and partnering innovation on the demand side, observing the often felt perception is that the ‘Green label’ means that it doesn’t work properly!√جª¬ø √جª¬ø√جª¬ø√جª¬ø√جª¬ø

The discussion then broadened to look at other technology such as electorisers, power to gas, development of batteries where the need is to separate power from energy. Tim felt that the Green Deal shows that the government not great at creating the market and others observed that the key is to integrate energy storage with new technologies such as smart grid.

Robert Hokin of Eco Connect concluded by talking about the higher appetite for risk in the USA and raised the abolition of capital gains on venture investments as a way of promoting growth in the UK. He went on to explain about the future shape of Eco Connect with a new website, members social networking area and future events such as next year’s Cleantech Innovate that can build upon the success of this year.√جª¬ø√جª¬ø

Originally posted 2013-04-17 00:00:00.