Talking NEVYs (and CleanTech + Energy) With MassCEC Managing Director of Investments Tibor Toth
On May 9, the New England Venture Capital Association (NEVCA) is holding their annual award show, the NEVY Awards at the House of Blues in Boston. As part of the lead-up to this year's Star Wars-themed event, we're going to be posting a number of bite-sized Q&As between now and the 9th—each offering a bit more insight into what attendees can expect (here's the one we did with First Star Ventures Founding Partner Millie Liu).
For this installment, we spoke with Massachusetts Clean Energy Center (MassCEC) Managing Director of Investments Tibor Toth about the event, as well as trends across CleanTech and energy. This year, "Company of the Year in CleanTech and Energy" nominees include CIMCON Lighting, Form Energy, Inc., Loci Controls, XL Fleet Electrification, and Ionic Materials.
Alex Culafi (AC): What are some of the trends in the CleanTech and Energy industry that you are seeing right now?
Tibor Toth (TT): As the costs of renewables, storage, and energy efficiency have dropped dramatically, there is an increased acceptance that clean energy technologies are not just necessary or “the right thing to do” for society and the planet, but that clean energy markets for generation, heating and cooling, and transportation are attractive and booming, and will drive a significant share of the generation mix, investment, innovation, and economic growth in the future. This has led to increased support and adoption from industry and customers.
Now that clean energy generation is a proven and cost-competitive “known quantity,” there is an increasing focus on grid resilience and efficiency. This includes new innovations in longer duration storage, network security for distributed generation and grid integration, and integration from large scale (e.g., Form Energy’s focus) to small scale (harnessing EV batteries for storage).
AC: For Boston in particular, what areas of CleanTech and Energy would you consider a strength in the region?
TT: Massachusetts has a unique combination of talent, leading universities and research centers, entrepreneurial infrastructure, leading global corporations, access to capital and eager customers, and tremendously effective policies and government support. Clean energy is an $11B industry in Massachusetts, including over 1.6 GW of installed solar capacity and the second largest solar workforce in the nation. The American Council for an Energy-Efficient Economy has ranked Massachusetts as the #1 most energy efficient state for the last 7 years in a row. The Massachusetts innovation ecosystem boasts many of the top startup accelerator programs, incubators, and research institutions with expertise in the cleantech sector, including MassChallenge, Cleantech Open, Greentown Labs, North Shore Innoventures, the Worcester Cleantech Incubator, the MIT Energy Initiative, and the Fraunhofer Center for Sustainable Energy. Massachusetts has consistently attracted the largest investment per capita for clean energy in the US, comprising capital from angels, VCs, corporate strategics, and impact investors.
In addition to strong policies to promote innovation and deployment in solar, the Commonwealth has developed programs and set aggressive targets to promote innovation and deployment of energy storage, clean transportation technologies and infrastructure, and the emergence of off-shore wind generation and infrastructure.
Finally, the sector is benefitting from the application of local expertise in IoT, AI/ML, blockchain, robotics, additive manufacturing, AR/VR, cybersecurity, etc., to addressing challenges and opportunities in clean energy.
AC: When you are evaluating a company in the CleanTech and Energy industry for a potential investment, what are the key elements that you look for?
TT: First and foremost for MassCEC, we look for companies based in Massachusetts that have a substantial, quantifiable clean energy impact and an enormous commercial opportunity. We support companies focused on clean energy generation, but we also look beyond that and seek companies that can significantly reduce energy consumption at various points along their supply chains, or enabling technologies and innovative business models that will support clean distributed generation.
We focus on six key thematic areas: next generation renewables, grid resilience, efficient mobility, the water-energy nexus, sustainable buildings, and industrial efficiency. As a quasi-public economic development agency, we’re also focused on supporting companies that are going to generate economic activity and create high-quality jobs in Massachusetts.
Like any other investor, we look for companies with a compelling value proposition and sustainable competitive advantage in large and growing markets. We expect our portfolio companies to generate a strong financial return as well as an environmental one – we are firm believers that financial return and environmental impact do not have to be mutually exclusive and, in fact, should be mutually reinforcing to be most successful. We also seek to leverage private capital, bringing new investors into a sector that they may not have previously considered, by serving as the clean energy investor expert in the room.
Finally, and perhaps most importantly, we look for strong teams. They need to have the right mix of technical talent, entrepreneurial experience, coachability, diversity, receptiveness to customer, investor, and expert feedback, and, of course, we like to work with nice people!
AC: Outside of the nominees, what other companies in the Boston CleanTech and Energy industry do you find interesting?
TT: In the clean energy generation space, we’re seeing so many exciting companies targeting both the hard and the soft costs of renewables, particularly in the solar space. One MassCEC portfolio company, EnergySage, is tackling the persistent challenge of high cost of customer acquisition in residential solar. They’ve developed an online platform for going solar, similar to Kayak. The platform has been proven to drive down the cost of solar (NREL did a robust study on this) through competition and by increasing transparency in an otherwise opaque market. This ultimately can make solar much more accessible, and the platform is highly scalable.
We also see a number of innovative new companies in the grid resilience, energy storage, and efficient mobility spaces, which ultimately see a great many converging trends. Via provides a unique way for energy companies with a ton of data to analyze it quickly, securely, and effectively, and to take action around predictive maintenance and contingency planning, using AI and blockchain technologies. Electra Vehicles has developed an optimization algorithm for designing and operating dual chemistry storage systems, to maximize battery lifetime and performance for both grid storage and electric vehicles.
AC: The NEVYs are right around the corner on May 9th! What are you looking forward to the most that night?
TT: Mostly, I’m excited to spend time with startups, co-investors, and other stakeholders in the innovation ecosystem. Boston’s startup and venture community is so vibrant! I have to admit too, that I have no inhibitions getting dressed up for each year’s theme. Last year I had the perfect Mardi Gras outfit right in my closet, although I may need to be a bit more resourceful with this year’s Star Wars theme—there are too many great characters to choose from, and I have to decide whether to go Jedi or smuggler.
AC:What is one thing that excited the Academy about each NEVYs nominee?
TT: CIMCON is a company with demonstrated performance in smart lighting, with a great deal of potential to expand product offerings to support smart city initiatives. They’ve expanded their footprint to over 20 countries and customers are recognizing substantial energy and operational cost savings.
For XL, the impact of fleet electrification cannot be understated. The company already has a number of big-name satisfied customers, like Coca-Cola and our very own City of Boston. The company recently made the BBJ’s “Top Places to Work” list – and they’re hiring!
With Form Energy, completely replacing fossil fuel baseload power generation with renewable energy has been a pipe dream for clean energy fanatics. This team is pursuing chemistries and performance targets that would be able to make that happen.
Ionic Materials has the potential to provide reliable, high performance, cost-effective, and safe energy storage, which is a necessity for widespread clean energy and distributed generation, and its early success has drawn significant investment from both financial and strategic investors.
And for Loci Controls, though automated landfill gas collection might not sound very sexy, the ease of use and effectiveness of Loci’s technology and product has customers raving about their solution, which automates and maximizes the capture of landfill gas, significantly increasing power and gas revenues. Because methane is such a potent greenhouse gas, the positive environmental impact of this technology is incredibly compelling.