Why Is Accel Ramping Its Cleantech Effort, While Others Seem To Pull Back?

The February issue of Venture Capital Journal features an interview with Peter Wagner, who leads Accel Partners’ cleantech effort. While other firms seem to be pulling back from the once-heated space, Accel is ramping up its effort. VCJ Senior Editor Mark Boslet spoke to Wagner (pictured) to find out why Accel appears to be taking a contrarian view. Boslet reports:

Peter Wagner Reveals a New Cleantech Conviction

Accel Partners has been wary of cleantech investing, but this appears ready to change.

The Palo Alto, Calif.-based firm says it is preparing to boost its participation, even as speculation grows that other firms—Kleiner Perkins Caufield & Byers, for one—are backing off from the sector.

The reason the firm is focusing on cleantech is because it is finally seeing investments it likes. A sign of this is the firm’s decision in November to co-lead the $50 million Series C funding of OPower Inc., which Accel says could make history as the first mass market software-as-a-service (SaaS) company.

Peter Wagner, one of the Accel partners leading the charge, says that the firm has been interested in cleantech for a while, examining startups and looking for opportunities.

“I think we’re probably more encouraged by what we’re seeing now than we have been previously,” he says.
Wagner spoke to VCJ about the market and Accel’s strategy:

Q: Is it fair to say Accel has taken a measured approach to cleantech?

A: We certainly have taken a measured approach with regard to actually committing capital. We have been very active in terms of sourcing potential investments, meeting with companies and trying to form opinions. [This] has not resulted in as many investments as [some] other firms because we have not found that many that we like.

Q: How many investments has Accel made in cleantech? I count 10 on the website.

A: It’s in the range of 10 to 15. [The others] are stealth companies.

Q: What categories of the cleantech sector interest you the most?

A: The whole world of enterprise demand management is an area we’re really interested in. You have solutions at the most basic level that offer monitoring and reporting on energy consumption, and from there move to energy automation and control. Beyond that you get into optimization—balancing different priorities and needs to achieve some optimized result. The fourth and maybe most sophisticated level is monetization, where you take some of these capabilities and use energy market structures to achieve not just savings but a new revenue stream.

Q: Are you worried about the sector becoming overheated?

A: Yeah. I’m always worried about that. As is always the case, good ideas attract a crowd. But there is still opportunity if you do it right and find the better ones and work more effectively.

Q: What will differentiate companies in the space?

A: The types of businesses we see [that are] most interesting are typically SaaS-based businesses. These are IT companies at their core. These are enterprise IT SaaS companies using cloud computing technologies and networking technologies.

Venture Capital Journal subscribers can read the full interview here.

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