2017 was a year of ‘firsts’ for Clean Energy Trust. We saw our first portfolio company exits and have demonstrated that our “revolving” fund model is working as designed. We will reinvest our investment proceeds into the next generation of startups for our 2018 cycle.
We published our first Annual Stakeholder Report, which in addition to highlighting our 501vc™ investment platform, also presented a holistic assessment of our investment impact.
- Over half of our portfolio company CEOs are women or minorities.
- One-third of our CEOs are first- or second-generation immigrants.
- Together, our portfolio companies have reduced carbon emissions by 40 million pounds – the equivalent of taking 40,000+ cars off the road. (And they’re just getting started!)
Recognizing that our core strength comes from our community, we upped the ante of our events schedule and held more roundtables, convenings, happy hours, and product demos than ever before.
And we made the strategic decision to redesign and overhaul the “Clean Energy Trust Challenge” program and event. We are more excited than ever to bring our diverse set of stakeholders together at our new annual portfolio demo day and thought leadership event, “Co_Invest Cleantech.”
Our 2018 investment cycle is well underway, having received applications from more than 100 early-stage cleantech companies. But before we dive into the evaluation and diligence process, we decided to take some time to reflect on our successes, challenges, and lessons learned in 2017.
KNOW WHAT YOU DON’T KNOW. Clean Energy Trust has been working intimately with entrepreneurs since 2010. We have great respect for all of the entrepreneurs and founders we have met as they each have chosen to embark on an incredible and difficult professional journey. When we try to identify if any characteristics or habits that suggest that a particular entrepreneur will be successful, two traits jump out: the willingness to ask for help and openness to listening to advice. Our most successful entrepreneurs have the self-awareness and emotional intelligence to cultivate strong networks of advisors and mentors, assemble strong boards of directors, recruit colleagues with complementary skill-sets, and proactively reach-out to Clean Energy Trust for help and advice. The all-knowing leader — an expert in technology, finance, sales, and management — who can single-handedly navigate a company to success, is a false archetype from which we distance ourselves.
GOVERNANCE MATTERS. Startups have little margin for error, and the impact of decisions compound quickly in early-stage ventures. The right decision at the right time can place a startup on the path to explosive growth. One wrong decision can result in an explosion with only a smoldering crater left behind. The companies Clean Energy Trust works with that are making sound strategic decisions are doing so with the help of engaged boards of directors. All too often founders view the board as a policing mechanism, something to be feared. We look to the composition of the board, and management’s engagement with the board, as a strategic asset and a leading indicator of future success.
WITHOUT SALES A TERRIBLE THING HAPPENS…NOTHING. Companies are built on products and technology; however, products and technology without markets and customers won’t create much enterprise value. Startups must understand their value propositions, their beachhead markets, the technology performance parameters, and the economics customers require for adoption. Even with this knowledge, startups must also understand how customers like to purchase, what service and support customers expect, and how their respective products fit into a broader solution. It’s only through consistent engagement with the market, even if it is just via informational phone calls or informal conversations at conferences and trade shows, that startups gather this knowledge. Startups don’t need to get it right straight out of the gate; often, pivots unlock tremendous opportunity. However, nothing should ever be done in a vacuum of market and customer understanding, and this is something we probe deeply in our diligence process.
GET SPEEDING TICKETS, NOT PARKING TICKETS. Our founding CEO Amy Francetic used to drive the Clean Energy Trust (electric) bus with this sticker slapped across the rear bumper. Everyone knows startups need to move fast to stay ahead of the competition, but even worse than a slow-moving startup is one that doesn’t move at all! Our staff has always been empowered to try new ideas and not be satisfied with the status quo. We’re always evolving and looking to improve. We look for similar qualities in our entrepreneurs. Great startup CEOs don’t wait for a lucky break to go their way. They make their luck by operating with urgency and exploring multiple paths in parallel.
EMBRACING IMPACT METRICS. Any good CEO knows their key business metrics and performance indicators: how many customers served, how much revenue, how many months/years of runway left, and how much money raised? But today it is not enough to only pay attention to the business metrics. It is becoming increasingly important for all companies, not just startups, and not just in cleantech, to pay attention and track their social and environmental impact. How does their technology help improve people’s lives and make the world a better place? How many jobs created, greenhouse gas emissions saved, illnesses prevented through pollution control? 2017 shed light on just how strong the momentum is for the business community to recognize, measure, and report their impact. Startups, and cleantech startups, in particular, need to know that investors are increasingly looking for and requiring clear impact metrics. And, these metrics, in fact, can open up a new class of philanthropic investors. For Clean Energy Trust, figuring out how to work with our portfolio to implement a standard way to collect and report these metrics is a top priority in 2018.
WHY BRAINSTORM, WHEN YOU CAN BRAINWRITE? Many of us have experienced the late-night brainstorm session when the group grows weary, and idea generation slows. Next time you find yourself thinking, ‘there has to be a better way,’ try brainwriting: Each team member presents new ideas by anonymously writing them on note cards, post-its, etc. From there, the ideas are displayed together, discussed, and voted on as a team. Clean Energy Trust recently discovered the art of brainwriting and uses it often to bring new ideas and concepts to life.
IT ALWAYS TAKES LONGER THAN YOU THINK. Whether it’s bringing on a new customer, closing a funding round, signing a partnership agreement, or ironing out the details on a grant, it always takes longer than you thought. And I know what you’re thinking. “This is cleantech. We’re selling to big companies that spend a lot of time controlling their risks. We know it’s going to take a long time. We’re ready.” We know you know this, but the truth is: it’s still going to take longer. Founders chronically underestimate the time and difficulty of succeeding at many of these tasks and therefore need a realistic and detailed game plan for raising money, hitting sales goals, etc.. along with (several) backup plans when things don’t go according to plan.
HITTING THE ROAD. We are based in Chicago and have built a strong foundation of relationships locally, but recognized we need to spend more time outside of Chicago supporting our broader region. It’s important for us to travel and meet with stakeholders in the community to ensure we hear about the best and brightest cleantech companies in the region. This year we put extra focus on getting out into the Midwest region beyond Chicago and successfully completed “site visits” to Columbus, Detroit, Indianapolis, Madison, Milwaukee, Minneapolis, St. Louis, and Urbana-Champaign. In 2018 we are looking for even more opportunities to make sure we are getting out of Chicago to uncover new companies for our pipeline and new partners for our ecosystem.
ONWARDS AND UPWARDS. In 2018 we are focused on deeper engagement throughout the region, doubling down on impact metrics for ourselves and our portfolio companies, and continuing to reflect, learn, and write about our unique approach to cleantech investing. As always, none of what we do would be possible without our dedicated entrepreneurs, corporate supporters, investor partners, foundation advocates, innovation hub allies, and everyone who comes together to support our cleantech community. Here’s to even more double bottom line impact in 2018!