A meeting of minds

CLEAN TECHNOLOGY:New green technologies need business support. The Copenmind conference aims to bring academic and business heads together

WITH COPENHAGEN hosting next year's UN Climate Change Conference - where a new global agreement on cutting carbon emissions will be the goal - the Danes are eager to polish its green credentials.

In years to come, the Danish capital might become to clean technology what Hanover is to industry trade fairs. At least that is the hope of Jorgen Mads Clausen, chief executive of Danish industrial giant Danfoss, one of the main backers of the Copenmind conference, a global clean technology conference to bring hundreds of academics, innovators and industry executives together. Researchers and innovators from over 125 universities, including Stanford, Caltech and MIT mingled with executives from global giants Toyota, Nokia and Deutsche Bank.

Michael Goguen, a partner with leading Silicon Valley venture capital firm Sequoia Capital, says that we're still in the early stages of clean technology development.

"We're roughly where the internet was in 1996 or 1997 - there's now a perfect storm. Even people who might not believe in climate change see factors such as the price of oil and the security of energy supplies increasing risks for their businesses," he says. Dr Thomas Reuschen, global head of asset finance and leasing at Deutsche Bank adds: "Three years ago, clean technology was still at the margins, but now something really big is happening. As well as wind farms, we're now involved in financing solar parks that are the same size as 190 football fields, providing 30 megawatts of electricity for 16,000 households.

"The International Energy Agency says developed countries need to invest $20 trillion (€14.5 trillion) in energy infrastructure. So the challenge is to address power generation and related areas like energy and water efficiency, while ensuring there are commercially viable, risk adjusted returns for businesses," he says.

Beneath the sweeping statements on policy, the race to come up with the most commercially attractive, efficient and economic technology was evident. Goguen described the challenge they face in getting them to market.

"Clean technology start-ups need to embrace Darwinian evolution, rather than the Big Bang Theory. They need to focus on solving a problem for their customer and then evolve along the way, because you might not get it right first time.

"Very often, the best technology doesn't always win the most customers, particularly if they meet the Big Bang after pouring a lot of money trying to get their product or service perfect," he says. Any fears, however, that there might be a "bust" in the clean technology business - as happened with the dot.com boom in the late 1990s - seem to be at the back of investors' minds at the moment: US venture capitalists invested $2.5 billion (€1.8 billion) in backing clean technology in the first six months of this year.

As something of a dot.com veteran - it was an early backer of Apple, Google, YouTube and Paypal - Sequoia has made several clean-tech investments so far, in diesel engine and data centre energy efficiency solutions.

"Creating sustainable companies will give us the most powerful tools we have to develop clean technologies. As an investor, we look for businesses with a high gross margin, usually 60 per cent or more. The company that uses the least capital and the least people will get to market faster, even though its technology might not be the best," Goguen added.

Getting an academic research project to the seed or venture capital stage requires a proper support structure and incentives. Being part of an academic research network can help, according to professor Andre Oosterlinck, president of KU Leuven, a network that aims to improve research in several universities in Belgium, Germany and the Netherlands.

"Our key function is finding industrial partners, financing and supporting researchers. But we take a commercial approach. Part of the net profit from our ventures is given to the relevant university's research division, who can then pay their inventors a bonus on top of their salaries," says Oosterlinck

By the end of 2007, it had started 78 spin-off companies, with 69 of those still active, and it aims to spin-off between eight and 12 companies every year.

Governments also have a part to play, by incentivising research and innovation in the right way, he says. "You need funding that is based on quality measures, which gives autonomy and accountability. So if a university does more contract research and generates more spin-off companies, then it receives more government funding."

"There is always room for improvement in the process of fostering innovation through such linksIndustry experience also plays a part," says Rob Wylie, partner with London-based WHEB Ventures, one of Europe's largest clean technology venture capital funds. "Marketing expertise, good industry connections and being able to identify routes to market or sources of finance are essential. Having access to individuals - such as business angels - who can take the technology forward and help to manage the process is also an advantage."

From an industry perspective, it can be a long and complex process to find the right academic partners, according to Roland Dargaud, a research executive with Renault.

"We work with more than 50 universities in France, but we want to expand our network and work with more foreign universities at the moment. We've contacted over 30 universities after meeting them at Copenmind.

"We would typically have a lot of ongoing discussions with them, without involving experts from our side at the initial stage. We analyse their responses to our questions and aim to find out the precise details of their research.

"Then, before we start working together, we would have to negotiate the conditions of co-operation and the aspects of intellectual property. That whole process can take at least a year," he says.

Simply keeping abreast of constant developments in all aspects of academic research and innovation, not just that in clean technology, presents a significant challenge, even to large companies, according to Dave Weyburn, renewable energy expert with Boeing.

"The largest challenge Boeing faces with respect to tapping into innovation in academe in general, not just in the area of clean technology, is finding out what everyone is doing. With roughly a trillion dollars spent annually around the world on research, a significant portion of which is taking place at universities and research institutes, identifying and understanding those investments is no simple task - it may in fact be impossible, for now at least.

"Add to that the cost of seeking out the work, taking time to assess its value to our enterprise, seeing how it relates to contemporary projects and you can see how difficult this is," he said. Undoubtedly events like Copenmind can help the process, particularly the networking aspect of it, but this event - like all such talking shops - was not without its critics. It was too much like a trade fair, according to Khalid Sheikh, a consultant who was formerly senior vice president with ABN Amro Bank and head of its sustainable development division.

"The universities didn't get a good opportunity to showcase their technologies. They weren't talking about them enough in the context of what corporations and political institutions are doing."

A renewed political drive to lead academics and businesses towards a shared vision might better help to improve innovation in clean technology. One accepted belief from the conference was that the clean - and green - technology sector is a primed for growth. Those looking for investment opportunities away from the traditional areas of construction and the like would do well to cast an eye over the opportunities in this arena.

As to Denmark's ambition of become a hotbed for clean technology, time will tell. Certainly they have started their pitch and there's no doubt the world will be turning to Copenhagen next year to see what emerges from the all-important climate talks. If successful it may well establish clean technology firmly in the mainstream business environment.

Three years ago, clean technology was still at the margins, but now something really big is happening- Thomas Reuschen global head of asset finance and leasing at Deutsche Bank

People can see factors such as the price of oil and the security of energy supplies increasing risks for their businesses- Michael Goguen, a partner with leading venture capital firm Sequoia Capital

In years to come, the Danish capital might become to clean technology what Hanover is to industry trade fairs- Jorgen Mads Clausen, chief executive of Danish industrial giant Danfoss