Carlos Perea works on a water-treatment technology that needs EPA and military testing before it can be sold, while solar and hydro require hundreds of millions upfront to build factories. Venture capital is learning to fund clean tech by partnering with corporations and governments instead of betting alone.
Chapters
I think the question was, it seems like, and I think if this is your assertion, this is correct, that our technology isn't as capital intensive to test in terms of the development of the technology. It actually has a lot of rigorous testing though, in the sense, probably more than is apparent, because it goes into EPA drinking water standards. And so the military tested this extensively. For us to have public drinking water system usage here in the US, there's a tremendous amount of regulatory oversight and hurdles that you have to go through. So it is a very rigorously tested device, probably much more than solar and hydro and other energy-related cleantech devices that I can think of in terms of is it certified, if you will, by the relative agencies. The other part of your question, though, I think is spot on, which is to develop the technology wasn't as capital intensive as, say, developing a new solar fab. Where you not only have the technology issues to deal with, you also have the capital intensity associated with ramping up production. And I think that's one of the things that the investment community is coming face to face with in clean tech very quickly is if you look at the way the venture capital community is set up, for the most part— and there are exceptions— it's really set up to take smaller bites at the apple, $5 million. Let's see this with a couple hundred thousand or a million, get to proof of concept, then put a couple million in, then we'll get to revenue, and then we'll put a couple more million in. And you have $10 million in for a company that— if you're Facebook, it's worth billions. But if you're kind of a normal trajectory, maybe you're worth 2 or 3 or 4 or 5 times that, a good outcome. And you look at a solar company, which might take $200 million on an extreme case to get ramped up, and then only to find out you're not cost competitive, et cetera. That's a really big investment chunk. And I think that has already played itself out to some degree. And the investment community is getting more thoughtful about how to either share that cost with either large companies or governments or others or how to figure out novel ways to get to proof points quicker and more inexpensively. But that is one of the big hurdles in clean tech is you just got to look at the money in versus the money out. And if the bet is a billion-dollar bet, it better be a $10 billion potential return because it doesn't make sense otherwise. That's a great question, a great observation about clean tech.
