Editing Small Is Beautiful For Green-tech Newbies

id="article-body" class="row" section="article-body"><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br>Les Fritzemeier heads up a tiny solar-energy start-up that most people have never heard of, [ Wakonda Technologies]. But rather than worry about being steamrolled by the sliding economy, he feels like he's in a great spot.<br><br><br>"In a lot of respects, the best time to start a company is in the middle of a recession, assuming you've got money," he said. "Our target is to go to market when most people expect the economy to turn around."<br><br><br><br>Without a doubt, the recession and lower oil prices are [/news/slowing-expectations-at-a-green-tech-start-up/ hurting many companies] in clean tech, a situation likely to slow what has been a frenzied pace of innovation.<br><br><br><br>But investors and entrepreneurs say that so far, smaller green-tech firms appear to weathering the storm the best, allowing them to continue developing new energy technologies. <br><br><br><br><br><br><br><br><br><br><br><br><br><br>To a large degree, that's simply because younger firms, in general, demand less capital to operate. Those green ventures [/news/credit-crunch-pinching-clean-energy-sector/ most vulnerable] are the ones that need late-stage funding--the tens or hundreds of millions of dollars to build a biofuel plant or  [https://www.kynghidongduong.vn/tours/tour-du-lich-sapa-tu-ha-noi-3-ngay-2-dem-2-ngay-1-dem-tour-sapa-ban-cat-cat-fansipan-thac-bac-ham-rong-tour-sapa-gia-re.html tour sapa giá rẻ] solar-manufacturing line, they said.<br><br><br><br>Across the board, though, investors and entrepreneurs report that the valuations of green-tech start-ups--once considered in [/news/clean-tech-bubble-talk-is-a-red-herring/ bubble territory]--are going down, and there is a growing emphasis on having cash.<br><br><br><br>"What's out there is a level of nervousness in every business," said Mitch Tyson, CEO of [ Advanced Electron Beams], which makes equipment to make industrial processes more energy- and water-efficient. "People still don't have a good sense of where the bottom is."<br><br><br><br><br>Seeking new sources<br><br><br>As a result, green-tech entrepreneurs--after being lavished with money and attention for the last three years--need to get creative with how they fund their ideas.<br><br><br><br>Consider Qteros, a young firm with a potential [/news/sunethanol-seeks-funding-for-fuel-making-bug/ breakthrough process] for making ethanol from agricultural waste, such as corn stover. One of its initial investors,  [https://www.kynghidongduong.vn/tours/tour-du-lich-sapa-tu-ha-noi-3-ngay-2-dem-2-ngay-1-dem-tour-sapa-ban-cat-cat-fansipan-thac-bac-ham-rong-tour-sapa-gia-re.html tour sapa] ethanol maker VeraSun Energy, [/news/ethanol-maker-verasun-files-for-bankruptcy/ declared bankruptcy], shutting it out of any follow-on round.<br><br><br><br>Other sources of money, [/news/bp-soros-fund-invest-in-ethanol-making-microbe/ including BP and George Soros' fund], filled the void. But the added work--compounded by cautious lenders--strung the process out from six months to nine.<br><br><br><br>"This Wall Street meltdown is having effects on early-stage green-tech companies getting the money they need to grow," said Jonathan Gorman, the manager of business development at Qteros. "There was a huge due diligence process, with outside scientists, as we looked for money, which they probably wouldn't have done before."<br><br><br><br>In another case of Wall Street colliding with green-tech garage start-ups, one newly formed firm nearly lost an investor when he lost half a million dollars on the stock market.<br><br><br><br>Late last month, SunRun, which installs and finances consumer solar-panel purchases, [/news/sunrun-lands-financing-for-solar-panel-service/ secured a $105 million commitment] from U.S. Bank, but it wasn't as easy as it would have been a few months ago: one investor said getting a bank to sign on to a tax equity fund was like getting on "the last helicopter leaving Saigon." <br><br><br><br>Fritzemeier of Wakonda Technologies seems have gotten the timing right too: he was fortunate enough to [/news/start-up-wakonda-promises-breakthrough-solar-cells/ raise money] in July, before the financial markets' meltdown. <br><br><br><br>He's optimistic about the future because demand for technology that reduces the cost of solar electricity will remain strong, even in a down economy. The company is trying to develop disruptive solar-cell technology by combining low-cost, [/news/thin-film-outfit-global-solar-touts-efficiency-seeks-expansion-funds/ thin-film manufacturing techniques] with very [/news/photos-solar-power-in-the-golden-state/ efficient cells]. <br><br><br><br>Like most people in clean tech, he's eager to see the shape of the Obama administration's [/news/energy-efficiency-high-on-obama-stimulus-plan/ energy and green-job initiatives].<br><br><br><br>"The continued emphasis on renewable energy and economic development from the incoming (Bush) administration may put additional support in place to accelerate our efforts," Fritzemeier said. <br><br><br><br><br>Flight to quality<br><br><br><br>Certainly, being in the right industry helps a small company's chances. While biofuels are closely tied to falling commodity and gasoline prices, products that [/news/smokestack-heat-fuel-of-the-future/ save energy] can appeal to cost-cutting businesses or utilities looking to make the electricity grid more efficient. <br><br><br><br>Advanced Electron Beams CEO Mitch Tyson said his early-stage clean-tech firm has not had to scale back.<br>Advanced Electron Beams<br><br><br><br><br>"We feel better that we're in the efficiency business selling to businesses," said Robert LeFort, the CEO of Ember, a wireless-networking firm that has shifted its focus to smart-grid products. "That's better than putting something on the shelf at Wal-Mart, and hoping the consumer picks it up...It's the lesser of two evils."<br><br><br><br><br><br>As more bad economic news comes out seemingly every day, many predict that the best companies--with paying customers--are the ones that have the best chance of thriving. A number of successful companies, including Google and Cisco Systems, were founded during an economic downturn.<br><br><br><br>Nicholas Parker, executive chairman of the Cleantech Group research firm, said the difficulty in getting financing in the coming year will thin the ranks of clean-tech start-ups and, from an investment point of view, result in a "flight to quality."<br><br><br><br>[https://slashdot.org/index2.pl?fhfilter=Advanced%20Electron Advanced Electron] Beams' Tyson is out, trying to raise another $20 million to $25 million Series C round, and he's gotten a commitment from existing investors and a good reception from others. The interest could well stem from the fact that the company already has customers using its product.<br><br><br><br>"I say to potential investors, 'We have a product in the field now and look at the customer base--the market risk is low,'" he said. "Knock on wood...So far, my experience, has been typical of normal times."<br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br>[#comments  Comments]<br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br>[/topics/culture/  Notification on Notification off Culture]