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Qi3 Ventures Insight

Saying no to Green Energy investments

Starting a new renewable energy business is a tough call.  After only a few months of angelhood, I’ve already come across at least two dozen pre-revenue wind, wave and solar power technology companies.  Each one offers its own version of “we’ll make it cheaper and our business model will thrash the competition”.  Each one (so far) has been accompanied by insufficient understanding of the real issues with new technology adoption; inertia and technology substitution.

By inertia, I mean the natural tendency of customers to continue to buy what they were buying before.  The latest version perhaps, but it takes a determined effort to engender a paradigm shift in purchasers’ attitudes.

The perennial myopia of the focused inventor leads to a lack of awareness of alternative ways of achieving the same goal.  Just because you think you have the best widget, others won’t necessarily share your view.  There are always technology substitutes that will be equally valid in the mind of the customer.

I spent nearly half an hour on the phone today, trying to help an entrepreneur to realise that a more thorough approach to competitive analysis was vital.  A proper understanding of direct and ‘class’ competition should lead to a much more realistic strategy and a firmer basis for competing.

In each of these renewable energy markets, and at each level of power generation, there are now between a handful and tens of companies already selling their wares.  It’s the challenge of the prospective new entrant to convince investors that his approach is rigorous and likely to succeed.

The future for clean and green technology investment

More mature renewable energy sub-sectors such as solar, onshore wind and energy efficiency are attracting the majority of equity and debt while less advanced subsectors are finding it harder to obtain financing.

A new report, published today by Taylor Wessing, discusses this crowding-out effect.  It is driving a wedge between novel technologies and those market sub-sectors which have moved somewhat beyond the arena of technological risk into that of regulatory, land acquisition, planning and development uncertainty.  Scale-up and consolidation within these sectors is capital efficient and of a scale sizeable enough to interest the Venture Finance community.

Less mature technologies are however less likely to receive funding, as investors increasingly see renewable energy as a done deal.  The survey reports an early-stage funding gap for European companies, especially in the biofuels, marine and green transportation sectors.

Should I be surprised that investment propositions based upon wind farm development should be more attractive than those relating to new wind turbine technology?

Bursting the dam? Glasgow pioneers free Intellectual Property for industry

The University of Glasgow is to offer Intellectual Property – including ground-breaking medical and scientific research – to business and entrepreneurs free of charge.  Speeding up and simplifying IP transfer, the move will revolutionise the relationship between academic research and commercial enterprise and make Glasgow the most libertarian University in the UK for IP access.  Through a dedicated University of Glasgow website – ‘Easy Access IP’ – cutting edge innovation and patents will be immediately and directly available to those companies and individuals who can make best use of the research“.

I’m delighted to see this move from Glasgow.  Whilst it’s fair enough to be cynical, given its tie-up with IP Group and the detailed mix of Easy Access versus Commercial IP Deals, it’s at least a breach in the dam.  Whatever one’s view about individual deals, there’s a strong perception in industry that University Technology Transfer Offices have often made life several shades too difficult and expensive for entrepreneurs and businesses seeking to access University-originated IP.

This has been done before.  Famously, CERN management decided in the early 1990’s to make Tim Berners-Lee’s invention of the World Wide Web.

CERN relinquishes all intellectual property rights to this code, both source and binary form and permission is granted for anyone to use, duplicate, modify and redistribute it“.

This noteworthy decision transformed the physical computer network into a practical and scalable means of sharing data.  Berners-Lee’s hyperlink enabled simple and instantaneous sharing of data between remote servers.

Will Glasgow’s move be as momentous as CERN’s?  Who knows?  But I hope that businesses will welcome, and, more importantly, take advantage of the offer, and that other Universities will follow suit.  Perhaps the days of the Smaug-like TTO are numbered?

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