A Call for Urgency and Passion Cleantech Venture Capital in Silicon Valley and Germany By Thomas Schulz Published in CSR International, 2/2010

1. CLEANTECH
A Call for
Urgency and Passion
Cleantech Venture Capital in Silicon Valley and Germany
To teach the dangers of exponential growth, this riddle is told in France: A water lily plant is growing on a pond. Every day, the water
lily covers twice the area it has covered the day before. If you let it grow over the whole water surface, all other plants and fish in the
pond will die. So you decide to let it grow until the lily covers only half the surface. Question: How long do you have to avoid disaster?
Answer: Only one day.
by Tom Schulz
Cleantech is the ideal combination of Challenges” by the masterminds in not developed enough sensitivity,
technology and meaning. It connects the Valley. These challenges are recog- and thus are dangerously undere-
information technology, the Internet, nized and formulated by international stimating them. When the Internet
semiconductor technology, chemical, organizations like the Copenhagen seemingly appeared all of a sudden
and biotechnology to save the world. Consensus, the WFUNA Millennium in the 1990’s, it was, in fact, a con-
Following the new trend, thousands Goals, and the U.S. National Aca- tinuous, and exponential growth,
of professionals in Silicon Valley, Cali- demy of Engineering. They all agree which had been evident for years to
fornia, are changing their career paths that humanity needs to address the those who could recognize it. The
to access the “Green Jobs” market. effects of exponential growth that are world-renowned inventor-scientist
Venture capitalists, like Vinod Khosla, getting out of control. These include Ray Kurzweil pointed out in his book
are seizing the opportunity and are population growth, energy consump- published in 2005, `The Singularity
raising new cleantech funds. Khosla, tion, the climate crisis, destruction is Near: When Humans Transcend
who is a pioneer in inventing whole of biodiversity, or the exploitation Biology‘, that we will experience a
market segments, recently closed a of natural resources including land “singularity” in less than 35 years.
1 billion dollar fund to finance for and water; but also social issues such That means that both the positive as
instance the production of biofuels as human rights violations, the gap well as the negative growth effects
such as cellulosic ethanol. between rich and poor, the lack of will lead humanity into a future that
democracy, pandemics or the equal we cannot yet imagine.
Venture Capital treatment of women.
for Grand Challenges One thing, however, is certain: we
All of these developments are gro- can counteract the negative progres-
The greatest challenges humanity wing exponentially, a process for sions only through enormous effort.
faces today have been named “Grand which we, as human beings, have Minor improvements or patch-up
58 forum CSR international

2. CLEANTECH
jobs will achieve no meaningful has had traditionally strong engi- ticians, scientists, philosophers, artists,
change on a global scale because neers, but startup financing occurs and other opinion leaders must take
we’re faced with inter-dependent rather through personal loans from their responsibility at the global scale
systemic challenges. To paraphrase a local savings banks than through very seriously. We do not need local
quote by Vinod Khosla from Khosla venture capital. In consequence, evolutions, but global revolutions.
Ventures: “It is completely irrelevant technology companies are either The question is no longer how do we
how many people drive a Toyota outrun by VC financed competitors create more German jobs but rather
Prius (hybrid car) here in California; from USA or Asia, or being sold at how do German exports help India
what counts is what kind of car low valuations to Siemens or other and China reduce their CO2 emissions.
the millions of new car owners in market leaders. The upside for the German industry
China or India will drive”. Applied is obvious. Yet, in order to become
to Germany’s car manufacturing Are foreign investors interested in significant global players, German
industry, this means that it does not German cleantech? Yes, but their engineers and entrepreneurs need
matter whether a German car manu- appetite seems to be even bigger for much more money than the current
facturer adds an extra electric motor the Asian market, especially China, allocated private equity, because a
to its 350 horse power SUV, but India, and Singapore. Frank Levin- cleantech business requires consi-
whether the German automotive son, investor and founder of Finisar derably more capital than an Internet
parts supplier will, or even can, pro- and an incubator in Singapore, justi- start-up.
vide a technology that finds its way fied his Asian investments by stating,
into a $2,000 Tata automobile. “China has cheaper labor, more en- We need a campaign for urgency
gineers, more entrepreneurs, more and passion. Today, we are not th-
Venture Capital in Germany of everything – including money.” reatened by sudden destruction, but
For obvious reasons, VCs like to be by a gradual decline into trivialities,
Starting a business in cleantech is close to their portfolio companies. insignifi cance, and self preoccup-
expensive and takes a long time, es- Thus, they have to open offices at ation.
pecially in comparison with software great expense and risk a great deal
or Internet businesses. Thus, there are when they expand internationally.
significantly larger funds raised; how- Some American VCs are indirectly
ever, all of them in the U.S. rather than investing in Germany, often as co-
in Europe. Three super-funds started investors, if they have a local VC Profile
the race in 2009: Khosla Ventures partner in Germany who focuses
($1.1 billion), NEA New Enterprise on local portfolio management.
Associates ($2.5 billion), and Norwest However, they often perceive the
Venture Partners ($1.2 billion). Each of European markets in general and the
these funds has allocated a large share German markets in particular often
of money to cleantech and keeps a as stagnant, infl exible, expensive,
close eye on the developments in India and conservative. In consequence,
and China. they often skip the old world and
go to Asia directly.
Cleantech VC investments in North
America have increased rapidly from Innovation, Entrepreneurship,
$1.33 billion in 2005 to $2.88 billion Venture Capital The serial-social entrepreneur Thomas
in 2006, and $4.21 billion in 2007. Schulz is the founder of Cybernet AG, the
The highest level was achieved in As we could experience during the first nationwide Internet service provider
2008 with $6.09 billion. The European dot.com boom, when innovation, that became the first publicly traded in-
ternet company on the German stock ex-
(including Israel) investments with its entrepreneurship, and venture capital
change in 1997. Moreover, he is co-founder
$1.83 billion invested in 2008 pale in work in unison, they can become a
of the Cleantech Circle in San Francisco, a
comparison. powerful economic driver. On the group of serial entrepreneurs and business
other hand, if research findings are angels focusing on cleantech investments.
When asked for their opinion on not practice-relevant, or are not ad- After spending the past ten years in Silicon
Germany, the cleantech insiders in opted by entrepreneurs, or if start-ups Valley as an investor and entrepreneur, the
Silicon Valley give the usual answers: do not receive the necessary funding, venture philanthropist relocated back in
Germany may be technology leader the system is blocked. Munich, where he recently co-founded a
in many areas, but they are barely new smart grid/energy efficiency start-up
known in the international scene. So, if we want to address any of the and is raising a cleantech fund.
Hardly anyone inside or outside Ger- Grand Challenges facing humanity
tom@cleantechcircle.com
many knows that the region Berlin- today and live a life of meaning and
www.tomschulz.name
Brandenburg constitutes the world’s fulfillment, we must think globally
www.cleantechcircle.com
biggest cleantech cluster. Germany more than ever before. German poli-
www.forum-csr.net 59