Premature Judgement

Author: Kevin Davis

Last week the Rebound team was fortunate to attend the NREL Industry Growth Forum in Denver. We had an opportunity to network with corporations, investors and fellow entrepreneurs who, in one way or another, will all contribute to our company’s development and success. We were grateful to be there and look forward to perhaps presenting in 2013. Just like any pitch event, it exposed a previously witnessed disconnect between investor and technology, an issue we believe contributes to cleantech’s underperformance.

The wrong technologies are being funded and its greatly affecting the cleantech industry. There is a clear systematic disconnect between investor and technology that leads these financers to overlook potentially promising solutions and instead invest elsewhere. This disconnect can be observed at almost any event involving a pitch and judging panel of investors. 

The root of this disconnect is a broken system leading to limited technical due diligence on behalf of investors. These individuals are clearly bright people with tons of experience and, hopefully, a handful of successful ventures. Many of them may even have technical backgrounds and/or rely on colleagues with such knowledge to guide their decisions. Unfortunately, the system in which investors interact with entrepreneurs is broken, creating a technical disconnect between these two groups. Based on witnessed events both through the course of these past months and at the IGF, we’ve seen investors make strongly inaccurate and unjustified comparisons of technologies.

In one instance we witnessed an investor compare the payback periods of completely unrelated technologies. Glossing over the details of different technologies while making overarching comparisons certainly let’s investors make quick, go/no-go decisions on a huge number of ideas, but it also blinds them to the real value of those ideas. The result: poor technical decisions using these high level, unrelated comparisons.

Similarly, we’ve witnessed investors compare two energy generation systems based on efficiency alone without thinking through the science behind the numbers. The point is, these individuals hold the fate of US energy future in their hands and are perhaps dismissing promising technologies based on unjustified comparisons that lack technical significance.

We all owe it to the community to improve the system by which investors screen technologies. As a 10-month-old startup, we don’t know how to fix all these problems. We do, however, know the system is broken and wish to contribute to its improvement. It’s time to start a discussion.