Danish Ideas: Making Solar Power cheaper than Fossil Fuels

Welcome to our new series aiming to present a number of Danish developed ideas and new technologies that showcase what the Danish start-up scene is all about:

Heliac in action at Roskilde Festival. Photo by Trendsonline
The sun foil from this month’s start-up Heliac in action at Roskilde Festival. Photo by Trendsonline.dk

Despite a population of only 5.6 million people, Denmark boasts a large number of talented entrepreneurs as well as skilled developers, scientists, and engineers.

In the coming newsletters, we will highlight some of these ideas and start-ups.

Are you a start-up yourself, ready to present yourself to Silicon Valley? Then let us get in touch!

Danish technology start-up focus on sun-foil as an energy source
The Danish newly launched company Heliac produces cheap thin plates of plastic, a product using a “sun-foil” technology. Among other uses, the foil can concentrate sunlight in order to cook food or clean water, without having to burn wood or garbage. The ambitious target is to revolutionize the field of concentrated solar power through low cost micro-structured foils.

The foil is named SMILE: Solar Mobile Independent Low-Cost Energy system, and earlier this summer, the foil was presented in a rather untraditional venue – at Roskilde Festival, the biggest music festival in Scandinavia – that being the closest Danish comparison to a camp in a developing country.

Latest, Heliac has launched a Kickstarter campaign that runs until late August, where contributors can either get a SMILE-foil for themselves to be used for camping, or can donate kits to families in the developing world.

Check out the campaign here.

The Hidden Revolution

Ever wonder about the billions of dollars of equipment and infrastructure needed for you to be able to turn on your bedroom light, wash the laundry, or perform any of the hundreds of daily tasks one does that require steady, reliable electricity?   As the Director of Commercial Clean technology here at the Innovation Center Denmark, I think about it all the time.  I think about it because there is a mostly hidden revolution happening around the world with Denmark and California leading the cause.

At the Innovation Center Denmark, Silicon Valley, we recognize the unique bridge we form between these two innovative Smart Grid economies.  In 2013, we will therefore launch the Smart Grid Advisory Group to bring together experienced operators, researchers, and entrepreneurs from both Denmark and California Smart Grid sectors to foster partnerships, transactions, and to push the state of the art in grid technologies and operations.

We want to change the fact that most people have little idea of what makes the power grid tick or how dependent their lifestyles are on it.  However, when you experience a prolonged power outage, you soon realize how important a reliable power supply is, how quickly it can be interrupted, and how long – and frustrating – it can be to get it back.  Part of the reason for all of this is that we are dealing with electricity and it cannot (yet) be efficiently collected for example, on a sunny day and stored for a rainy one.  Instead, engineers, utilities, regulators, and entrepreneurs have had to build a machine so vast and so complex that it can generate electricity virtually at the instant when you turn on a light switch or plug your phone into its charger.  Multiply that responsiveness across billions of devices demanding electricity, hundreds of power plants producing the electricity, and thousands of miles of wires transmitting the electricity, and it’s pretty close to a miracle that the machine works at all, never mind that it works steadily and constantly throughout the day and year.

In addition, demand is anything but steady – people turn on and turn off devices throughout the day.   This unsteady demand requires electricity supply and generation that can meet it even at the busiest ‘peak’ times, and quickly ramp down when it slows.  Fortunately, for the incredible people who work in the power supply field, there is a lot of historical data and hard lessons learned such as the great Northeast blackout of 2003 that enable operators to pretty accurately predict what the demand will be and when, and how much power they will need to meet it.

Adapting big changes to this equation is extremely challenging. Failure to adequately adjust can be catastrophic, which is one big reason why the utility industry tends to be so conservative – when power goes out, people don’t just lose money, they can lose life and limb.

It is incredible then to consider that grids around the world are experiencing just such rapid change right now with the push for electric vehicles, solar power, wind farms, iPhones, and the mammoth data centers to power all of our Google searches and Facebook posts.

Meeting the entire unprecedented surge in electricity demand is a rapid increase in the proportion of renewable energy making up the supply.  That renewable energy, often sourced from wind and solar energy, is relatively unpredictable.  This unpredictable supply or intermittency effectively adds yet another challenge to keeping the power demand and supply of the power grid in balance.

With a goal of moving from 30% today to 100% renewable electricity generation by 2050, Denmark is arguably the most experienced market in the world with balancing these new electricity supply and demand dynamics.  California also has ambitions goals too increase the share of renewable generated electricity in its energy mix, but on a far larger scale than even Denmark due to the relative sizes of the two economies.

Viva la Revolución Oculto!!

By Patrick Stanton

Why not SCALEit?

Are you an entrepreneur and in the process of building a company that has the potential of becoming a global company. If yes, then is Innovation Center Denmark now offering you a unique accelerator program. SCALEit gives your startup the opportunity of going on a 1-week inspiration tour in Silicon Valley.

Silicon Valley is known for fostering a huge amount of successful startups such as Facebook, Google, Twitter, just to mention a few.  The Valley offers everything a startup needs in order to grow into a global company.  This being venture capital, ambitious entrepreneurs, first class developers and state-of-the-art technology.  The vision with SCALEit is to bring Danish startups to Silicon Valley to take advantage of the growth engine by connecting scalable technology companies to the Silicon Valley ecosystem.

This time the SCALEit accelerator program is a three-step model designed to inspire, ignite and accelerate your startup. Depending on your specific needs, you can decide to participate in those steps that fit to your company.

If this sounds somewhat intriguing, then jump to our website http://come.scaleit.us/#ca7/custom_plain to find more information about the program, our amazing mentors and the opportunities waiting for you in Silicon Valley. Information meetings will be held from April 30th to May 3rd at 6 different locations in Denmark – sign up here.

Ready, set, SCALEit

From downturn to recovery – 2011 Silicon Valley venture capital stats

SVForum quarterly venture overview: 2011 year review

On Feb. 7 2012 SVForum gathered a group of venture capitalists, entrepreneurs and the business community to report on 2011 venture statistics. Following the presentation of stats, SVForum invited partners from Norwest Venture Partners, Venrock and Hummer Winblad to a panel debate on the broader outlook of the Venture Capital industry in 2012.

On the road to recovery

The general picture of the venture capital (VC) industry in 2011 once again confirms the often-cited fact that one-third of world total venture capital is located in Silicon Valley. Another one-third of the remaining capital is located in the rest of the US, while the last part is scattered around the world.

Many other stats presented also validate that Silicon Valley continue to be the strongest area in the US in terms of VC. More specific, the total amount invested in Silicon Valley was $11.6 billion in 2011 up from $9.1 billion in 2010. Compared to the New England region, which ranked second in the US, where the total amount invested was $3.2 billion in 2011 and $2.6 billion in 2010. Also, by looking at number of deals made in each region in 2011, we see evidence of Silicon Valley and its venture capital dominance, namely 1.158 deals were made compared to New England with only 441 deals.

In terms of industry-specific investments, we find that Software is the sector receiving the most funds from VCs. Software based firms received a total of $6.7 billion in venture capital in 2011, up 38% from 2010. The second most valued sector is biotechnology which raised $4.7 billion in 2011 – an increase of 22% compared to 2010.

A VC industry in disequilibrium?

From these figures, it was argued that the VC industry in general has made a smooth landing after the economic downturn that began in 2008. The total investment in 2011 was $28,4 billion, up 22% compared to 2010. This level of investment is close to reaching the levels of 2007 (and 2008 before the downturn).

On the negative side, there are some reasons for being concerned about the future of the VC industry as whole. The stats presented at the meeting also indicate a disequilibrium between the amount of VC investment and the inflow in venture capital funding. This has created a funding gap that could influence VCs ability to provide funding in the future. The gap is not a new phenomenon, indeed in the last four years the industry has had a year-end deficit of $4 billion in 2008, $3 billion in 2009, $9 billion in 2010 and $10 billion in 2011. On top of that, one of the major institutional venture capital contributors in the US, Calpers, is planning to drop their venture capital allocation in 2012 from 7% to 1%, which will further hurt VC funding opportunities for some time to come.

On a separate note, Steve Goldberg from Venrock, commented that the upcoming IPO of Facebook will funnel money back into the Angel/VC environment, providing some optimism to the entrepreneurial community in spite of the expected decline in VC fundraising.

Implications for entrepreneurs

What do these stats mean? And how will it affect entrepreneurs in 2012? The panel debate with three venture capitalists tried to address together with other issues faced be entrepreneurs and VCs.

It is clear from the comments by the panelists that requirements for getting your start-up funded by VCs is increasing. The bar will simply be set higher. VCs will be more selective and will focus even more on picking only the really good deals. The evaluation of a start-up should add up to a multi-million market potential before the start-up becomes interesting from a VC perspective. Also they want to see ideas that present a clear value proposition.

Generally the panelists commented that they give a lot of attention to the team behind the start-up. Proven record and experience with dealing with critical stakeholders to your start-up is regarded as highly valued.

The comments from the venture capitalists are all rather well known – nothing really unexpected was expressed. If you are a start-up, getting funded should never be considered an easy task. Ann Winblad from Hummer-Winblad venture partners noted that, in the end, “building a start-up is about assumptions, which is also why it’s called venture capital. As the start-up unfolds its execution plan these assumptions will be tested against the market, revealing whether the assumption was right or not”. On top of that, some concluding advise from the panelists to the entrepreneurs was to “unwrap” your ideas and get feedback from relevant people. Too often entrepreneurs are afraid of having ideas stolen – which rarely happens – resulting in good ideas being lost because experienced executives could not provide feedback.

SV Forum’s Annual Cleantech Conference, Part 2: Cleantech investment opportunities

Read part 1 from SV Forum’s Annual Cleantech Conference here

Reflecting on the money rush of 2006-2009 and some refreshing realism from the investor panel

Jason Matloff, Battery Ventures, Rachel Sheinbein, CMEA Capital and Dylan Steeg, Intel Capital started the investor panel by outlining their views on the evolving role of venture capital in the cleantech space and by pointing out some of the limitations of the VC asset class.

The sweet spot for venture capital is about $50-75 million in total funding needed in order to reach exit. What happened in 2006-2009 was a unique period of time when money came from other asset classes (hedge funds, private equity etc.). In addition, industrial multiples are much lower than for tech companies so valuations were inflated. None of the panelists expect there ever to be another batch of companies like the current class that is now coming to maturity and have raised hundreds of millions in venture capital (think Tesla, Fisker, Solyndra, Miasole, Bloom, A123 and many others). Venture capital is not seen as a vehicle to fund science projects and should not be exposed to novel manufacturing practices, high degrees of science risk or massive scale manufacturing projects with a high cost to prove either the technology or the economics (utility scale renewable energy, car manufacturing).

There is a new realization among investors that it is very difficult for startups to compete against mature global companies in markets where the end products are not differentiated and margins are thin. Therefore in the viewpoint of several of the panelists, that VC investment in companies that plan to compete in the commodity manufacturing space will continue to fall.

In addition investors are discounting any company that depends on government support which is fading throughout the world given a variety of dynamics in the public sector (politics, lack of good will, budget constraints).

Newfound realism leads to better investors and sharper entrepreneurs

While there is not a 100% overlap between cleantech market opportunities and the types of companies that VCs will fund, VCs remain very active in the space with a new focus on capital efficient companies potentially using a fabless operational model. Entrepreneurs should be selling a premium product with healthy margins not competing on the commodity energy and water markets because of the scale required and the maturity of industries they are up against.  Software, ICT, power electronics, systems solutions, analytics and automation were consensus areas of interest among the panel.

Companies need to be very sharp in understanding what it will take to scale the company and reach a sizable market. Who are the intermediaries that will be key to the success of the company?  In many cases the success depend less on the technology than on the business model and the ability to execute of the team. In the cleantech space many companies are dealing with an entrenched value chain so partnership is very important.

For emerging technology companies it is increasingly important to understand where in the value chain you are innovating and where you leverage existing infrastructure both from a technology and manufacturing standpoint as well as in the go-to-market strategy where partnership with sales channels that already have key relationships can be crucial.

With those words of wisdom for entrepreneurs, the investors finished the panel on an optimistic note predicting that with a more focused approach the VC community will continue to actively invest sizable amounts in promising early stage companies that are addressing global energy and resource challenges.

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