Clean Energy

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Green for Clean

By Mary Beth Barber

Joe Lichy, a microprocessor designer who moved from computers to solar cells, laughs off the origins of his company as a classic cliché. The original design for a silicon-efficient solar cell was drawn on a napkin in a San Jose pizza parlor, the first prototype built in his garage. While he worked with microprocessors by day, evenings and weekends were spent tinkering with solar cells.
    The computer chips he designed used the concept of cooperation — multiple chips working together — and his innovation has resulted in big bucks for his former employers. Lichy applied the same design concepts to solar cells, built a prototype and placed it on the roof of his garage. One of his initial prototypes was successful enough that Lichy started thinking about his own solar-cell company based on the patented design. NuEdison, the company he started, is rapidly moving from concept to reality, in part due to a new Sacramento competition.
     A local initiative called CleanStart offers fledgling entrepreneurs a chance each year to make an elevator pitch about their “green” business and compete to win prize money for their business plans. This fall marked the debut of the annual PowerUP! competition from CleanStart, with Lichy and his company NuEdison taking the $25,000 first prize.

The New New Thing
“We wanted to bring clean-energy entrepreneurs out of the woodwork, and we wanted to draw sponsors to this effort,” says J.D. Stack, program manager for Economic Development and Commercial Services for SMUD and a judge of the CleanStart PowerUP! competition. “You know the saying, ‘It takes a village to raise a child,’” says Stack. “Well, it takes a network to grow a company.”
    This network is an initiative of the McClellan Technology Incubator and the Sacramento Area Regional Technology Alliance, and the contest is designed to encourage the region’s company executives to improve their business plans, sharpen their presentations and seek assistance and guidance from mentors, advisers, workshops and other resources provided by the program. PowerUP!’s location requirement allowed entries from Reno to the Bay Area and everywhere in between, with the caveat that the winner would need to be located in the Sacramento region in the near future. A grand prize of $25,000 for first, $15,000 for second, and $10,000 for third doesn’t hurt.
    For the competitors, there is more to this competition than just the chance to get some walking-around money and bragging rights. There’s also the chance to share war stories with other members of this early-stage fraternity.

Pecking Order
The world of the energy efficient entrepreneur is not an easy one. “I went through some rough times,” says competitor Al Rich, president of SolarRoofs.com of Carmichael and a semi-finalist in the competition. Rich has more than 37 years in the solar-power business but says he had to essentially start over in 1995 after a change in a SMUD program he had relied on for his business. He remembers the past 12 years with distaste, and welcomes the changes from programs such as CleanStart.
    “In Sacramento in 1993 there were companies around that were cutthroat,” claims Rich. “It’s much different now.” The business and personal connections he’s made recently differ drastically from what he experienced in the early 1990s. The CleanStart mentoring program, SARTA events and other networking opportunities in the Sacramento region have given him the positive feedback that he longed for a decade ago. “I’m starting to break out of my shell,” says Rich. “It’s been basic raw survival for so long.”

Incubating Dreams
The rules of the CleanStart competition are fairly straightforward: Be an incorporated clean-energy tech company, show your business plan and seven-minute pitch and utilize the CleanStart mentoring and networking resources as much as possible. Clean energy is loosely defined as renewable energy resources, such as solar or biomass, or efficiency measures for traditional technologies.
    Business types in the CleanStart 2006 competition included wind, solar, biomass, fuel cell, thermal, transportation, energy efficiency, fuel storage and hydroelectric. Twenty local companies were part of the preliminary round in the summer, and 16 made it to the semi-finals. Six finalists presented their plans on Nov. 15.
    Some executives are only recently out of school; (Third-place Audience Award winner Shawna Brown, chief scientific officer of High Merit Thermoelectrics, and her partner CEO Geoff Jennings, are both products of UC Davis). Brown just got her masters in chemistry, and Jennings is an MBA student. Other competitors, such as Rich, have owned their businesses for decades, whereas Lichy, involved in technology for some time, is just starting to go out on his own.
    Many of the PowerUP! competitors also participated in other regional clean-energy business-plan competitions, such as UC Davis’ annual “Big Bang” competition and the California Clean Technology Open in Silicon Valley. “I thought the finalists were stronger at CleanStart,” notes Lichy, adding he thought all six finalists were viable companies.
    But if the CleanStart competitors are to be viable, there remains the question of whether the $25,000 grand prize is really worth it when much more is needed to truly build a company. CleanStart supporters say such criticisms miss the point of the program.
    “It doesn’t matter if you (win) the contest or not,” says Ingrid Rosten, executive director of CleanStart. The goal of CleanStart is to attract growing companies like NuEdison, help executives from young companies like High Merit Thermoelectrics build their business plans and pitches, bring long-time clean-energy folks like Rich and SolarRoofs.com out of the woodwork and provide mentoring and networking opportunities.
    “If you want the area to grow, create an incubator for clean energy,” she says. “The competition is only part of an overall support network.”

The Clean Stuff
High-tech innovation is a newer direction for the region. Sacramento has historically relied on government, military or large employers (e.g., Campbell Soup and Aerojet) says Gary Simon, president of Acumentrics Corp. and Sigma Energy Group and one of the early planners of the CleanStart initiative.
    CleanStart panelists name a number of factors that make Sacramento an attractive place for a growing clean-energy company: the proximity to the state capital in light of the clean-energy push from Gov. Schwarzenegger, the research done at area universities such as UC Davis, and the support from local entities like the Sacramento Area Regional Technology Alliance (SARTA). The clean-energy concept has enough buzz that when Valley Vision, a consortium of universities, utilities, local government and business groups published “Partnership for Prosperity: A Business Plan for the Sacramento Region,” building a clean-energy sector was one of the points of the five-point plan.
    Clean energy is also one of the hottest areas in venture capital these days. In the first quarter of 2006 there was more venture capital money for clean energy than for computers, notes Acumentrics’ Simon. “The whole sector has grown, and truth is, there is more money than there are deals,” he says.
    While there may be financing available for clean-energy companies, the entrepreneurs have to work for the cash. Venture capitalists and angel investors learned their lesson from the dot-com bust and won’t simply throw money at entrepreneurs and gamble that something will stick. “The success rate of people with good ideas is relatively low because they don’t know how to take the idea and make it work,” Simon points out. Business-plan competitions help bind the technology world with business to create viable companies.
    CleanStart’s purpose is also to attract the attention of technology experts and show them what the Sacramento region can provide. Cary Vandenberg, CEO of NuEdison, lists what he’s learned that makes Sacramento an attractive place to build a company: solid workforce, positive business climate, high quality of life, and reasonable cost of housing compared to Silicon Valley.
    The competition gave Michael Hess, founder of second place winner Mariah Power, and his team the incentive to investigate Sacramento. Mariah Power is headquartered in Reno, and Hess says he is impressed with Sacramento’s overall goal of building a clean-energy sector and was willing to move here if they had won first. But NuEdison’s tech guru Lichy has one other reason why Sacramento attracts him and other clean-energy experts: SMUD.
    “SMUD is the most proactive utility in clean energy in California,” says Lichy. “Not to put down the efforts of the others, but SMUD is first.”
    While no place in California could be considered “low cost,” Sacramento has less expensive property and a lower cost of living than San Jose. It’s only a two-hour drive from Sand Hill Road and the venture capital offices in the Bay Area. Sacramento communities also have demonstrated an interest in industrial development — West Sacramento for one, says Lichy, adding, “You can’t say that about San Jose, for example. They’re not interested, because they don’t have to be.”
    While it’s likely the bulk of the venture funds will continue to come from the Bay Area, Sacramento’s CleanStart creators hope to draw entrepreneurs to take the next step here. “No one yet owns the moniker of being the clean energy capital in the United States,” said SMUD’s Stack. “That’s what we hope to do.” 

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