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Midwestern Sensibilities: Report from North Central Cleantech Open

Last week, I served as a judge for the North Central regional contest of the Cleantech Open in Minneapolis.

The Cleantech Open is a annual contest to identify the most promising cleantech ventures from across the U.S. (along with some foreign entries).  This year’s event will be held on November 8-9 in San Jose.  Advancing there from the North Central region — which includes much of the Midwestern U.S. — will be the following three ventures:

  • HEVT, a Chicago-based venture commercializing technology developed at the Illinois Institute of Technology to eliminate the need for volatile-priced and environmentally-damaging rare earth metals in high-efficiency motors.
  • IrriGreen, a Minneapolis-based company offering an elegantly-simple solution for lawn sprinkling that is much lower cost and uses much less water for more thorough coverage.
  • SiNode, a Chicago-based student-led spin-out from Northwestern University working on superior anodes for batteries that promise longer talk-times and shorter recharge times for smartphones.

These ventures were selected from 20 that made pitches to a team of judges (including myself).  As you might expect, there was some variation in quality among the 20:  the above-noted (and a couple more) were pretty darn interesting, whereas probably ten of the 20 would likely be of interest only to few potential investors.

In addition to the 20 ventures in this year’s regional contest, some winners from the North Central region in prior years of the Cleantech Open participated in an open-house.  Three of these especially stood out to me:

  • Atmosphere Recovery, from the Minneapolis area, which is selling a unique Raman laser gas analyzer to facilities with industrial gas processes, allowing for much more efficient operations.
  • Earth Clean, also from the Minneapolis area, which offers a very promising fire extinguishing material called TetraKO that is far more effective than either water or foam while also being entirely biodegradable.
  • Whole Trees, from Wisconsin, which sells components based on small diameter trees to provide cheaper, stronger and more aesthetic structural building systems than steel.

According to several judges who’ve been involved for several years, the progress made by alumni since their participation in the Cleantech Open suggests that they benefited from the rigor involved in participating in a venture competition.  So, it will be interesting to see how this year’s winners — HEVT, IrriGreen and SiNode — evolve and appear in future years.

While perhaps not as widely-recognized as other geographic areas, promising cleantech innovation is occurring in the Midwestern U.S.  Reflecting the no-nonsense pragmatic ethos of our region, this entrepreneurship is less of the “swing for the fences” variety associated with the bold cleantech gambits made in batteries, electric vehicles, biofuels or solar.  But, as many investors have experienced all too painfully, some of the ventures pursuing big ideas in these spaces may have been “bridges too far”.  Much better, in my humble opinion, to bite off opportunities that are easier to chew — and that’s what largely seems to be happening here in the Midwest.

sOccket to Me!

Innovation in the cleantech arena often entails combining inarguable facts in strange ways.  Consider these apparently-unrelated truths:

  • Much of the developing world lacks access to electricity.
  • Fertility rates in the developing world are typically much higher than in the developed world.
  • There are few things with more untapped energy than a young child.
  • Children around the world love to play soccer.

Combine these four observations and, voila, you have the basis for sOccket.

sOccket (I can’t claim to understand why the “O” is capitalized and the “S” isn’t) is a soccer ball with a device inside that generates electricity as the ball rolls and stores the electricity so that lights or other small appliances can later be plugged into it and operated.

You would think that such a ball would produce a miniscule amount of electricity – so little that it wouldn’t seem to offer much benefit to anyone.  However, with the dramatic decline in energy consumption for lighting due to LED technology, 30 minutes of play with the ball produces enough power to run a small lamp for 3 hours.  In rural villages in the developing world, this can be the difference between a child learning to read or not, or an adult generating an income from making a sellable item or not.

Although not the first or only product aiming to convert human kinetic energy into stored electricity for later use – see, for instance, the nPowerPEG developed by Cleveland-based Tremont Electric – this sOccket ball is an almost irresistibly attractive idea.

I say “almost”.  In my view, there is one fly in the ointment for sOccket, something that will inhibit it from reaching massive scale:  there is a disconnect between the customer who pays for the product and the user who benefits from the product.  Naturally, this stems from the fact that the user – that child in Kenya or Bangladesh – has no cash to buy the ball.

The business model is essentially charity:  someone from the developed world who has access to the Internet buys a sOccket ball with a credit card, and the ball is then distributed through a local NGO operating in-country to a worthy child.  In other words, a customer buys the sOccket ball for psychic value, not because he/she actually uses the ball and gains any tangible benefit. 

There is no doubt a market segment of consumers with these preferences.  I wish I were less cynical and could say that I think this is a sizable segment that could lead to a very large and lucrative business.  But, I’m not. and I don’t.  And, I think many other private sector providers of capital would feel the same way.  So, I suspect that sOccket will not get a lot of outside capital to support its potential growth.

Maybe the sOccket team can work miracles solely by bootstrapping.  Clearly, the inventors of the sOccket have demonstrated extraordinary creativity in connecting several disparate dots to come up with an innovative solution to an unmet need.  It’s an excellent case study and inspiration for other cleantech entrepreneurs to reflect upon.  In particular, it reveals that cleantech innovation needn’t involve a radically disruptive breakthrough technology.  And, hopefully, given the “out-of-the-box” thinking that the sOccket team has exhibited to get as far as they have, maybe they will invent a business model that is more scalable than what I think they are currently pursuing — which could in turn be lucrative for the founders. 

I’m guessing that, if they were able to produce a multi-million dollar pay-day for themselves, the entrepreneurs who founded sOccket would find good uses for their newfound wealth – just as the first inklings of wealth, enabled by electricity generated by sOccket, can help lift untold numbers of desperately poor people worldwide out of poverty and towards (if not immediately fully into) the 21st Century.