Cleantech is a term used to describe knowledge-based products or services that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy consumption, waste, or pollution. Its origin is the increased consumer, regulatory and industry interest in clean forms of energy generation—specifically, perhaps, the rise in awareness of global warming, and the impact on the natural environment fom the burning of fossil fuels. The term Cleantech is often associated with Venture Captial funds.
Venture Capital funds? More on that important, highly related topic later!
Interestingly enough, Cleantech, and its related first cousin, Greentech, are not referenced in Miriam-Webster's dictionary. In fact, the first word M-W offers when searching Cleantech online is clean-cut! We ARE talking about a nascent industry after all.
Now that we've mined Wikipedia for a solid market definition, let's break that definition down to a more segmented description. Mike Harding, one of the entrepreneurs behind Montara Energy Ventures, along with other industry participants and observers, provides one:
- Conservation Cleantech
- Transportation Cleantech, and
- Energy (aka Electricity) Cleantech.
Each of these segments are distinct in their own way, with a related ecosystem of investors, start-ups, media and analysts. That’s not to say there are no interrelationships between the three… there are. However, the use of these three segments separately as a working definition, particularly when talking about Cleantech Marketing, will prove useful.
Before examining each, its also worth noting that there are four important parameters that over-arch and help define the three segments from a start-up view. They are related, and include short-tail and long-tail investment, and high, or low, up-front capital costs. These four parameters, which we'll examine, have a material, influential affect on marketing scope related to the start-ups represented in each sector.
Let’s jump back to our definitions of the three Cleantech segments, starting with Transportation Cleantech. A good example is the company Better Place. This is a company that knows how to get noticed. A Google search titled 'Better Place Batteries' results in over 12 million listings.
Venture-backed Better Place, based in Palo Alto, CA, came up with a novel way to reduce dependency on oil through the creation of a market-based transportation solution that supports electric vehicles. Think gas stations everywhere that, instead of dispensing gas, switch out your nearly depleted car battery with a fully charged one. You're in and out in minutes, just like pumping gas using today's model.
A great example, widely recognized, of Transportation Cleantech. One key item to note is the construction cost of each of Better Place's battery switching stations: $500,000. The good news is that is about half the cost of building a traditional gas station. The bad news is the company's business model calls for MANY battery switching stations to give drivers the coverage they will need. That translates to very high capital costs for this transportation start-up.
However, the company has much going for it, including a charismatic CEO, Shai Agassi, strong executive team, blue-chip investors such as VantagePoint Partners and Morgan Stanley, and growing government support. Including early government support from Israel. And, a consumer market that appears to be moving steadily toward electric and hybrid car use. This is a company, in spite of high initial 'CAPEX' costs, that has many elements in-place that support the potential for a successful global marketing effort.
Now, if only the price gap between a hybrid/electric model and a standard gas model automobile would shrink to a more reasonable level. In some cases, today's hybrid model is as much as $10,000 more than the same model gas model. For the average US consumer, a small Toyota Prius or Honda Civic may pay for the price difference after 3-5 years, but what about an SUV? And, SUV's remain popular in the US. Will consumers pay the higher freight? A good summary of this issue can be found here: http://personalbudgeting.suite101.com/article.cfm/hybrid_suvs_is_better_gas_mileage_worth_cost
Speaking of CAPEX costs and the unimportance of marketing, let's examine Cleantech Energy. There are many examples here, but generally we are talking about setting up a power source and then supplying it. The power source could be geothermal, solar, wind or hydro. Some stretch that source to include nuclear power. Generally, all are considered energy that is environmentally friendly, non-polluting and are believed to lower carbon emissions, in the process creating less pollution. Most are usually placed in the 'output' context of electricity.
Many sell their output as Cleantech power directly to govermental entities such as cities or states, or to the for-profit energy companies that supply those cities, states or nations. The reality for many Cleantech Energy start-ups is that they must solve to a very high CAPEX model. That model includes a requirement for land, physical plant, often onerous govermental regulatory requirements, and complex negotiations covering major, long term contracts with commercial or govermental customers.
While there is an argument for some marketing among key constituencies that influence land use decisions, regulatory passage, and approvals from elected officials and their voting publics, it is brand marketing only. There appears to be little need for demand generation marketing, or the creation of qualified leads that transition to new customers. Cleantech Energy start-ups know who their target customers are. And those customers are finite.
