Envision Ventures Partner Talks CleanTech; Why and How He Funds Startups

Dan Ahn, Managing Partner at Envision Ventures

Dan Ahn, Managing Partner at Envision Ventures

Recently, MITCNC hosted a forum entitled Multiple Ways to Fund Your Clean Energy Startup. Numerous experts provided CleanTech entrepreneurs with new ideas to fund their companies. Some of the alternative funding sources included: angels, private equity, corporate venture funds, federal or state grants, international venture investors, and prizes.

We’re pleased to invite Dan Ahn, Partner of Envision Ventures and a panel speaker, to share additional thoughts on the panel discussion, as well as the partnership he seeks and builds with his portfolio companies.

Anna: Welcome, Dan! Why did many CleanTech startups fail over the past years?

Dan: Good question. Let me start with a “historical” perspective: “CleanTech,” from an institutional investor perspective, has been a dirty word. CleanTech startups on a whole lost lots of money in the last 15 years—except Tesla and a few others. Doing particularly poorly were startups in energy storage and solar. The value proposition around dollars per kilowatt-hour commoditized, as well as being too capital intensive, failed miserably.

Anna: And Solyndra was the poster child turned bad.

Dan: You know why Solyndra was a big ticket failure?! They were selling the idea of “better and cheaper.” But they couldn’t compete with the manufacturing cost curve in Asia for photovoltaics. Then you look at a company like Tesla. It focuses on a market segment that wants to make a statement about being green, likes high performance cars, and doesn’t mind paying for them.

Anna: What do today’s investors see in CleanTech startups that is different?

Dan: Innovation around software has been interesting. ChargePoint (electric vehicle charging network) and Autogrid (big data for energy) are two investments I made that are doing well. Investors that are doing well today stay away from capital intensive commodity businesses.

Anna: Tell us more about the alternative funding sources.

Dan: Pursuing VC investment is not always the right path for every entrepreneur. Entrepreneurs should think about the mission of the startup, and seek the appropriate financing vehicles. At the MITCNC forum we discussed at length about grants—should an entrepreneur take grants? I believe that it’s worth pursuing if your product development is not distracted by the paperwork. The paperwork is not that big of a deal. If seeking fulfillment of the grant is not distracting, then do it.

Anna: What should entrepreneurs know about Envision Ventures? How is this fund different?

Dan: Over my 17 years investing in the Silicon Valley, the fund objectives have shifted. The early VC backers had a long term perspective. Today, many funds have end-of-life issues when funds get close to year 10, and they try to force the sale of portfolio companies. In the past, VCs had the patience to nurture startups. Some of these portfolio companies would take as long as 15 years to go public and did really well. Today, if your startup is not a “unicorn” in a couple years, VCs lose patience. I take the long-term view. As an evergreen, my fund does not have an end-of-life, and we recycle proceeds, so we can take a true long term view. I believe in partnering with committed and mission-centric entrepreneurs. I believe in partnering with startup founders to form a life-long relationship, and I do my best to help my portfolio companies by providing valuable resources, including helping them tap into interesting customers, network of CEOs, CTOs, and management teams. I look for technologies with big market potential.

Anna: Thank you! For entrepreneurs interested in starting a dialogue with Dan, you can reach him at http://envisionvc.com/#contact.

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