New Models For Clean Technology Incubation and Commercialization

By Sanford Selman

We live in an age of intense global competition for more sustainable ways of providing food, water, energy and transportation to a growing population against a backdrop of diminishing and deteriorating natural resources. And thus, the race is on to create the next generation of technologies, business models and companies to provide these essential services and commodities. At stake are new, high quality jobs, export earnings, reduced dependence on imported energy, improved quality of life and host of other positive impacts. Investing in R&D would seem a no-brainer.

And invest we do. According to the National Science Foundation, public and private sector R&D investment in the US was $369 billion in 2008 – over twice that of Japan (No. 2 at $148 billion) and over 3.5 times that of China (No. 3 at $102 billion).

According to the National Business Incubator Association, the US has over 1100 business incubators as compared to roughly half that number in China. In cleantech, however, the US is losing the race to China in important areas such as solar photovoltaics and batteries where the technology traces its roots to the US and Europe.

Why, then, does the US, with its much larger pool of venture capital funds, lag in moving clean technology from lab to market, especially compared to a relative latecomer to cleantech such as China? Both countries have first rate university systems and enjoy a culture of entrepreneurship. But there are stark differences which give China a distinct edge, especially in cleantech, including:

  • A more stable policy environment that unambiguously supports cleaner forms of energy supply and energy use.
  • More diffuse boundaries between government, academia and industry which allows for greater pooling of resources – commercial, financial and technical.
  • Lower costs of de-risking technology, due to the lower cost of highly qualified technical talent, and manufacturing.
  • Huge, state-controlled infrastructure markets (e.g. power generation, water/wastewater, hydrocarbons, etc.) where the playing field can be tilted in favor of domestic suppliers.

In today’s highly disrupted capital market, early-stage venture investment has dropped precipitously and this is especially true for cleantech – a sector which has struggled to demonstrate strong, broad-based financial returns. Additionally, scaling and deploying clean technologies often involves significant capital investment while venture funds are trying to do just the opposite – invest as little as possible to get to positive cash flow. This focus on “capital efficiency” also means early-stage companies are out of favor. Hence, the gap between the early-stage cleantech companies found in incubators and what venture investors are buying has widened while countries such as China plow ahead with their national priorities.

A new incubator model

One of the main roles of an incubator is to prepare their clients for presentation to outside investors and to help facilitate those introductions. But their clients often have little progress to show in technology scale-up or customer acquisition. Frequently, their business model has not been vetted, key members of the management team are not on board and a helpful, engaged Board is not in place. Another approach is needed to close the widening gap between incubator clients and the venture community.

By acting more like a seed-stage fund itself, an incubator can add the value required to make its clients marketable to outside investors. In this model, the incubator’s advisory board must be sufficiently qualified and engaged to undertake preliminary vetting of applicants so that only the most technically and commercially promising businesses are admitted. Once admitted, the incubator should “smother” the client with resources, including missing commercial and technical talent, access to strategic partners, access to prospective customers and the seed-stage capital necessary to pull the plan together. A more resource-intensive approach focused on fewer clients stands a better chance of achieving the longer-term goal of graduating more successful businesses out of the incubator, creating jobs and enhancing the opportunity for the seed capital to earn a return.

A new strategic partner engagement model
Early-stage companies need to conserve cash by leveraging relationships with strategic partners and suppliers who can help grow their businesses. Risk sharing or the more appealing term, “gain sharing”, is becoming more popular. Two examples are worth noting.

Autodesk, a leading global vendor of engineering and design software, launched the Autodesk Clean Tech Partner Program ( to support early-stage clean technology companies by providing up to $150,000 worth of software for a nominal fee. Autodesk’s long-term objective is to build brand loyalty by giving participants with design tools they wouldn’t otherwise be able to afford, and thus help them become successful more rapidly.

PLUSHnyc ( is a Manhattan-based post production audio/video company whose clients include some the biggest names in media, advertising and retailing. PLUSHnyc offers their excess design and production capacity to early-stage, venture-backed companies at a nominal rate and, in return, receives equity in proportion to the market value of their services. Similar to Autodesk, PLUSHnyc affords access to world class services their clients could not otherwise afford.

In order to maximize the effectiveness of US R&D spending, innovative business models must be called upon to more effectively that tap the vast talents and resources of the private sector and accelerate the commercialization of US-developed technology by American companies.

Sanford J. Selman is Managing Director of Asia West LLC in Oyster Bay, NY. Mr. Selman founded and managed the Asia West Environment Fund, an early-stage cleantech venture fund that invested in North America and Europe with proprietary technologies that are commercially and environmentally relevant to China and/or India. Mr. Selman has 30 years of experience developing and financing of energy and environmental infrastructure and technology globally. Mr. Selman holds a BS in Mechanical Engineering (with Distinction) from Worcester Polytechnic Institute and a MBA in Finance and Investments from The George Washington University.

8 replies
  1. T.W.
    T.W. says:

    Hi Sandy / Hi Neil … I'd add another set of answers to your question…(Why then, does the US,..etc)

    For one – VC firms need to think a bit more outside the box, many times I've noticed VCs get too bogged down on the non-essentials and have a pretty set way of selecting investments. I saw a lot of "box ticking" going on in the US – as if there was "a set model for success"… I see this as a limit to innovation – and not just technological innovation, but business innovation – especially on your points "how to accelerate lab to market / how to maximize capital efficiency".

    I've seen US companies in my peer group spend $400M on one product – flop and die….But to me, someone gave these companies the money and then told them how to spend it…capital was not being used the right way, or was valuing the wrong things – obviously. In addition – Most VCs are "followers", you know it's quite a herd out there. A wrong move from the herd can really impact a national-level lag in innovation…! and I don't have the answer to that one…!


    • Sanford Selman
      Sanford Selman says:

      Yes, thanks for your input and all valid points. By "smothering" the early-stage company with resources, I also mean exposure to potential customers as well as seasoned management talent who serve either on an interim basis or simply as advisors to try and mitigate the "tyranny" of investor-knows-all thinking. There's no substitute for deep domain experience coupled with good business instincts.

  2. Cleantuesday
    Cleantuesday says:

    AgroParisTech et Cleantuesday vous invitent à une conférence sur le thème : « BIOMASSE ENERGIE », le mardi 9 novembre 2010 à l’amphi Tisserand, 16 rue Claude Bernard, 75005 Paris à 18h30

    Cette conférence est présentée et animée par Cleantuesday et c’est une occasion pour AgroParisTech de montrer son implication dans le domaine de l'environnement, et d'accroître sa réputation dans d'autres milieux professionnels, tout en proposant aux étudiants un aperçu du monde professionnel des Clean Tech en leur faisant découvrir les dernières innovations.

    Créée à l’automne 2008, Cleantuesday (association loi 1901) a pour but de supporter le développement des « Clean Tech » ou « éco technologies innovantes » en Ile-de-France et à travers la France.

    L’association Clean Tuesday rassemble la communauté des professionnels des Clean Tech en France, autour des start-up et des PME françaises : grands groupes (Veolia, SNCF), investisseurs (fonds de capital risque), collectivités locales (Mairie de Paris, CCI de Nice).

    Chaque mois, Clean Tuesday organise une conférence à Paris qui rassemble environ 150 professionnels des Clean Tech.

    La prochaine est donc prévue ce mardi 9 novembre à partir de 18H30:

    -de 19H à 20h pitch sessions; 4 entreprises innovantes de la biomasse energie, start ups et grand groupe, francais et international

    -à 20H, d’un « networking » autour d'un buffet, jusqu’à 21H30.


    * la start up française Naskeo

    la start up française Canop

    la start up française Thermya
    * la start up francaise Biogreen Energy

    * Autres intervenants

    -à 20H, d’un « networking » autour d'un buffet, jusqu’à 21H00.

    Wir sind eine Handelsgesellschaft für den technologischen Austausch zwischen Frankreich und Deutschland im Bereich nachhaltiger Entwicklung. Wir möchten Ihnen vorschlagen an einer Veranstaltung in Frankreich zum Thema Biotechnologie teilzunehmen und laden Sie hiermit herzlich dazu ein, dort Ihre Aktivitäten und Ihr Unternehmen zu präsentieren (hierbei kommen bis auf Reise und Aufenthalt keine weiteren Kosten auf Sie zu).

    Das Konzept ist einfach: „Cleantuesday“ hat es sich zum Ziel gemacht regelmäßig Start-ups und Unternehmen aus dem Cleantech-Sektor zu entdecken. Um ihre Entwicklung zu fördern wird die Möglichkeit geschaffen ihre Aktivitäten vor der Cleantech-Gemeinschaft vorzustellen sowie am Buffet Kontakte mit anderen Business-Networkern zu knüpfen.

    DIENSTAG, 9. November 2010, drei Cleantuesday Veranstaltungen in Frankreich und im Ausland.

    – Cleantuesday in Paris : Thema Biomasse-Energie. Mit den Französischen Start-ups
    THERMYA, Biogreen Energy, Naskeo und Canop.
    Agro ParisTech, 16 rue Claude Bernard, 75005 Paris. Von 18:30 Uhr bis 21 Uhr

  3. Stubbins
    Stubbins says:

    *I discovered your blog site on google and check a few of your early posts. Continue to keep up the very good operate. I just additional up your RSS feed to my MSN News Reader. Seeking forward to reading more from you later on!…

  4. Anna Brown
    Anna Brown says:

    The Earth Dog Story
    Earth Dog – Environmental Education – Company Overview: Who Is Earth Dog Many people concerned about the environment refer to themselves as Earth Dogs. The character Earth Dog was developed to help make learning about the environment FUN, interesting and interactive. Unlike many previous environmental characters, Earth Dog is not violent, “Dogmatic” or “Environ-mental.” He is fun and he invites everyone to participate in helping him solve environmental problems and join him in his… | Facebook
    Earth Dog Story

  5. Heather Nelson
    Heather Nelson says:

    Tiredness, fatigue
    How to increase energy website is your resource for help get the energy you need to get thru the day. Find resources and advice on curing fatigue. With hectic schedules many of us find ourselves fighting tiredness and a lack of energy. Get advice on improving your energy level. Learn how to increase energy.
    cure fatigue, increase energy

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply