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Tough choices: top cleantech finance pros

Last week we published the list of top 20 cleantech finance pros to watch in the coming year. I created the list after careful consideration and with great input from industry sources—but it was difficult to narrow the field due to ever-changing business models and wide expanse that cleantech covers, such as water, energy efficiency, solar, wind, biofuels, building materials, smart grid, transportation and energy storage.

These finance executives and their groundbreaking companies are making a big impact on cleantech, in California and beyond. We’re keeping an eye on them, and if you’re working in cleantech you will most likely be impacted by what these pros and their colleagues are doing. If you have any comments, please let me know at cvane(at)roseryan.com.

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Clean energy needs federal policy commitment, project funding

I attended the third annual Cooley Clean Energy and Technologies Conference November 2 in Redwood Shores, and there were several interesting speakers and discussions. The event focused on innovative models in business, financing, policy and regulation. Some of the highlights:

There is a huge potential for the reduction of emissions in global shipping using dozens of existing technologies—the estimate is a reduction of 500 million tons of carbon annually by 2020.

The solar industry globally is way down: global leaders Spain and Germany have reduced spending, a worldwide surplus of equipment has driven down prices, and smaller companies have merged or gone under. Now energy efficiency is the strongest cleantech growth engine.

One panel discussed the need for more creative ideas for funding to help start-ups gain cash flow to make it through the “valley of death” that follows the first round of angel funding, to get them to the next stage of additional VC or PE funding.

Another interesting comment, which most of the panel members agreed with, is that the government provides initial funding from grants and loan guarantees, but there isn’t a long-term policy commitment to see it through to fruition.

The panelists also believe that more government money should go to clean energy projects (such as infrastructure and the smart grid) and not just new technologies. This is where the jobs will come from in greater numbers. Personally, I think this is on target. The current national grid was designed many decades ago, and upgrading it is critical. This investment in our infrastructure would have an immediate effect on job creation and energy savings; it is also critical for our national defense.

Speaking of jobs, Clint Wilder from Clean Edge presented the annual jobs report for the industry. There are 3 million cleantech jobs globally, and 500,000 of those are in California. In fact, the Bay Area is ranked No. 1 in the country, followed by L.A. at No. 2, San Diego at No. 7 and Sacramento is No. 15. Four out of the top 15, that’s not bad!

The bottom line seems to be that to make an impact on the environment and creating more jobs, now and in the future, there should be more focus on using existing technologies, more project-based funding, and a long-term policy plan from the government and industry.

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Great clients + good food and wine = success

I’m happy to report that a great time was had by all at RoseRyan’s annual client appreciation party. More than 70 clients and RoseRyan folks gathered to toast success, network and enjoy being appreciated and pampered at Spalti’s in Palo Alto. Local wines were tasted, delightful appetizers were consumed, and good friends enjoyed catching up with one another. Thank you to everyone who attended, and we look forward to seeing you at next year’s celebration!

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Rev rec worries? Just give it time (and remember to breathe)

The new rev rec guidelines have made for some labor-intensive process changes in some of the client companies that we work for.

It took me back in time to the initiation of Sarbanes-Oxley (SOX) compliance and how it made stress levels skyrocket. Fears of the additional headcount that would be needed just to get the job done, what would happen if they didn’t comply, how they would disclose deficiencies and what affect that would have on the company, confusion about how to write a narrative or test plan and what’s a key vs. nonkey control.

Now, years later, working in the corporate governance line of business, I see an entirely different story. SOX has become so much a part of the fabric of the process within a company, that when a company is considering a process change, we actually hear “How will that affect the SOX testing?”

I think we would all agree that fear of the unknown is always greater than the fear of the known. As we work to make SOX controls part of our everyday life and the process becomes repeatable, the fear evaporates. The controls identified in the narrative have become part of the day-to-day process, employees are educated on controls and many companies have found that outsourcing SOX testing to companies like RoseRyan has been the right decision for their business.

This same approach will work for implementing the new rev rec guidance. Getting outside expert advice or implementation help, using some of the software tools that already exist (rather than re-creating the wheel) and looking for the simplest approach in implementation (not to mention taking a deep breath on a frequent basis), will all make the changes easier. And before you know it, you’ll be through the worst of it and it will feel like it was always a part of your process.

This just reaffirms how adaptable we all are. And isn’t it wonderful how time changes everything?

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Feds award $1B for R&D to small biotechs

The life science community has been anxiously waiting for the announcement of the awards for the $1 billion Qualifying Therapeutic Discovery Project program and the results are out!

Many Bay Area companies did quite well, receiving all or part of what they asked for; this was particularly true for smaller companies. Four of the five companies RoseRyan worked with to develop applications received grants ranging from $244,479 to $733,438. (As a finance professional, I have to ask, Why the odd amounts? So far, we haven’t got an answer to that one.)

The program, part of the health care bill, was designed to spur research and development at biotech companies with 250 or fewer employees through awards of tax credits or grants. According to the San Francisco Business Times, the Treasury Department received applications for about 5,600 projects. The Times published a partial list of Bay Area recipients, and you can see the full lists of recipients by state at the IRS website.)

Last June, my colleague Chris Vane and I spoke with about ten companies at a free consultation with BayBio, and did work for five. This involved helping them write or edit the grant and providing strategic advice, leveraging our prior grant submission work with the Department of Energy as part of our cleantech practice. These companies said it was very useful to sit down with us and talk with them about their strategy for writing grants. We played devil’s advocate, asking questions and helping them look at their business plan strategically.

There could be more grant opportunities cropping up in the future, and it never hurts to apply for a grant or other funding, because it presents an opportunity to take a hard look at your business and appraise why the work is important, where you want to take it and how you will get there.

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