Cleantech has reached a tipping point. Businesses that do not embrace clean technologies and adapt their revenue models will have to pay a hefty price to stay alive. The effects of climate change are hard to predict, yet sceptics are now forced to admit that Earth’s biosphere is experiencing profound changes. After all, we’re going through the sixth biggest mass extinction of species, and this one is happening faster than when the dinosaurs were wiped out.
If your business was ISO9000 in 1987, you were one of the few visionaries crazy enough to invest in quality. Today, with more than a million companies certified across the globe, it is almost impossible to do business without quality certified operations. Incorporating sustainability in your activities now is just the same: you can delay paying the bill, but the sooner you pay, the cheaper it is.
Wait. Did I hear, “There is no money in cleantech”? When considering the equity gap, the lack of exit opportunities and the amount of investors that got burnt by the solar industry after the global financial crisis, one would be inclined to concur. The old cleantech models were not sustainable, partly because of the capital intensity and their reliance on subsidies.
How does it work then? The great thing about cleantech is that it’s an investment thesis, not an industry. Cleantech innovation intersects with so many sectors: advanced materials, energy efficiency, recycling and waste, biofuels and biochemical, geothermal, transportation, smart grid, biomass, water, air, fuel cells and hydrogen… With the trends in population growth, technology explosion and resource depletion, there has to be some money somewhere.
When Google purchased Nest, the smart thermostat, for $3.2bn in January 2014, it wasn’t labelled as cleantech, but as an innovative opportunity for the multi-billion dollar energy market that is in a desperate need of reinvention. The deal is so obviously cleantech that it doesn’t need to be spelled out. When a car dealer sells you a vehicle, does he insist on the fact that the braking system is quality certified?
The megatrend was already there in 2009 when Jeff Skinner, Executive Director of the Deloitte Institute of Innovation and Entrepreneurship at London Business School, founded the CleanTech Challenge jointly with Tim Barnes, Director of UCL Enterprise Operations and UCL Advances.
The CleanTech Challenge was created on the belief that there already exists a number of ideas and technologies that can be applied to do more with less. What is lacking is the impetus, skills and confidence needed to turn these into sustainable businesses. The CleanTech Challenge provides all three – encouraging students to crystallise their ideas on paper and then challenging them to think through and shape the resulting opportunities and build teams around their nascent ventures. Students from leading business schools and universities around the globe develop their clean technology business ideas through a three-stage competition that runs from November to April every year. Ten finalist teams compete during the ‘boot camp’ finals that take place at the School, where they receive feedback and mentorship from industry professionals (venture capitalists, entrepreneurs and corporates). The winning team gets £10,000 towards implementing its idea, often as a startup.
The whole process has been running like Swiss clockwork ever since, thanks to the five generations of zealous London Business School MBAs and UCL PhDs in charge of the competition execution. The boot camp has become a global event attracting hundreds of applications every year, and the model is being franchised to other leading universities across the globe.
For example, this year’s winner – Meta Heat – is offering a promising and non-traditional cleantech innovation. Tanks to the development of new materials, the young PhDs have developed a heat dissipation technology for electronic devices that can increase the battery life of mobile phones. Interestingly, Meta Heat is based in Southeast Asia.
Indeed, emerging markets have an incredible appetite for cleantech. Not because it is more ‘hip’ to be green, but because resource efficient technologies simply make more sense in high growth environments. Bloomberg New Energy Finance estimates that China’s cleantech market exceeded $60bn in 2013, overtaking America’s $50bn. Innovation is increasingly moving closer to growth areas, and the CleanTech Challenge now tries to tap into these new pools of clean brains.
So why not join the revolution? The CleanTech Challenge is always looking for mentors, judges and sponsors. Spending time with these passionate young entrepreneurs is refreshing. Let’s just hope their company remains refreshing after they’ve made their first million.
Alexandre Gilbert MBA2015 is co-chair of the LBS CleanTech Challenge. For more information visit the CleanTech Challenge website