A Cleantech Recipe that Finally Works: Student Entrepreneurs

Sustainability oriented innovation, and financial capital allocated towards such, will prove imperative in addressing our current environmental crisis.

One of the chief outcomes of the recent COP-21 Climate Conference was a global agreement that the confluence of financial resources and continuous innovation in clean energy would be essential to mitigate the climate changes inflicting our planet.

Coral Davenport said in The New York Times: “Experts said the ultimate measure of success of the agreement will be whether it sends a clear signal to global financial investors that they should move money away from fossil fuels and towards clean-energy sources such as wind and solar power. Without that signal, there is little chance that emissions will be reduced enough to stave off the most catastrophic impacts of global warming.”

The Advent of Clean Technology

“Cleantech,” once a sexy term for innovations from tech engineers creating products like thin film solar panels and futuristic batteries, has turned into a plagued phrase in recent years, as billions of grants, loans, investments, and tax breaks have been poured into the sector, only to result in a lack of anticipated breakthroughs and a series of expensive tax-funded failures.

In 2012, Silicon Valley’s biggest pockets were dropping cleantech from their portfolios and a multitude of once somewhat successful cleantech companies were going bankrupt. In 2012 and 2013, the value of deals to fund renewable energy projects fell 9.1 percent and 12 percent, respectively, according to Bloomberg.

On Jan. 5, 2014, CBS News aired “The Cleantech Crash,” further perpetuating the notion that renewable energy companies make for an inopportune investment. The interview highlighted energy investor Vinod Khosla, known by many as the “Father of the Cleantech Revolution,” and boasted the tagline: “Despite billions invested by the U.S. government in so-called ‘Cleantech’ energy, Washington and Silicon Valley have little to show for it.”

Is it possible that cleantech is not in fact crashing; rather, the world has been approaching clean technologies the wrong way?

Representing this very phenomenon, cleantech investor Peter Shannon recently published an article in Fortune.Com, called “Why Every Entrepreneur Should Take a Closer Look at Clean Tech,” in which he delineates the evolution (and, thus, current opportunity) of cleantech investing. Shannon said that 10 years ago, investment in clean energy was dedicated to funding large-scale risky inventions, a capital budgeting mismatch for venture capitalists.

Although the term cleantech was temporarily polluted, as many of these ventures proved futile, the world is now equipped with an abundance of scalable, cost-effective clean technologies.

Shannon wrote: “For example, by itself a battery does little, but with battery-enabled propulsion, we can completely rethink transportation, mobility, robotics, drones, and much more. Rather than emphasizing technology breakthroughs, this new wave of clean-tech business is all about finding applications and solutions. The possibilities will be limited only by an entrepreneur’s imagination.”

The next frontier of clean technologies represents an evolution of past iterations: building on prior inventions, but targeting specific customer segments, grasping niche markets, and leveraging business model innovations. Risk and capital assessments can today be more easily ascertained, as we can test the viability of cleantech products and services without having to reinvent the wheel or build costly infrastructure.

But the ultimate success of the next frontier of clean technologies is dependent on the entrepreneur.

The Massachusetts Institute of Technology’s Clean Energy Prize (CEP) is tackling the environmental crisis head-on. Originated in 2007, the CEP has become the largest student-led clean energy business plan competition in the U.S., and a true catalyst for accelerating the pace of energy entrepreneurship and innovation. It’s mission is to inspire and prepare the next generation of energy entrepreneurs.

The past eight competitions have proven to do just that. Thanks to generous sponsors, such as the U.S. Department of Energy, National Grid, and GE Ventures, the prize has awarded a total of $2.4 million, leading over $240 million in follow-on funding to 490 applicants and more than 400 professional volunteers.

Past recipients of prize money include Ogin (formally known as FloDesign), which installed 1,000 kW in wind turbines in California this year; Transatomic Power, which developed a molten salt reactor that generates clean, safe, low-cost nuclear power; and C3nano, a company that has since raised $22 million and is advancing the development of solution-based transparent conductive inks and films to replace indium tin oxide.

Senthil Balasubramanian, co-founder and head of product innovation at Sistine Solar, said: “Winning the renewables track of the 2013 MIT Clean Energy Prize was life-changing for us — it was the first step in the transformation from a bunch of students with an exciting idea into a credible team that is now backed by brilliant angel investors and the U.S. Department of Energy SunShot Initiative. And for my co-founder Ido and me, at a time we chose not to pursue traditional job opportunities and graduated with student loans, the prize money was like oxygen for a newborn baby. We wouldn’t be where we are without the CEP. Period.”

Sistine Solar is introducing radical new designs to the solar panel world.

On April 30, at MIT’s Kresge Auditorium, the CEP will award over $200,000 to the most promising student-launched ventures across the nation. The event will feature keynote speakers Paul Bodner, former assistant to the President and senior director for energy and climate change at the U.S. White House; and Adam Cohen, deputy under secretary for science and energy at the Department of Energy; as well as hundreds of energy enthusiasts and professionals.

The Next Frontier: Student Entrepreneurs

Incentivized competition, born in 1927 with Charles Lindbergh and the Spirit of St. Louis winning $25,000 for the first-ever fluid trip across the Atlantic Ocean, has been demonstrated to empower breakthroughs and solutions once deemed impossible. Highly leveraged incentives have proven, time and time again, to encourage actions that surpass the boundaries of human potential — to change the world for the better.

The growth of student entrepreneurs passionate about solving the world’s problems arrives at an opportune time, as more financial capital and political willpower should be — must be — allocated towards clean energy innovation. While the actions of global financial investors are of utmost importance to driving solutions to climate change, we must not forget the crux of these investments: the innovation.

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Jennifer Ballen is a first-year MBA candidate at MIT Sloan School of Management and the Communications Director for the 2015-2016 MIT Clean Energy Prize. Jennifer is the founder/writer of sustainable business blog, www.thesustainableinvestor.net , originated on the premise that profitability and environmental/social impact need not be mutually exclusive. In 2014, Jennifer became trained as a Climate Leader with Al Gore's Climate Reality Leadership Corps. Jennifer is a Level III CFA Candidate and holds a B.S. in Finance and Marketing from Lehigh University.

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