Are Technology Services Companies Closest to Cleantech Revenue?

No less a well-informed observer than a key investor at the VC Draper Atlantic states unequivocally that the best place to be for Cleantech talent right now is with the technology services companies... not the start-ups themselves.

The argument works this way: while investement in Cleantech companies has declined recently due to the recession (venture investment in the sector globally dropped 41% during Q1 2009 compared to the previous quarter, according to Deloitte), those start-ups that have launched and are now selling products will find it difficult during the near-term to sell into enterprise customers for all the reasons documented in the business press... companies are conserving cash, reducing headcount, and are reluctant to spend money on innovation offered by an early stage company they've never worked with, let alone even heard of. Not only will they not buy, but many won't even return phone calls.

Thus, the argument insists the best sales channel for newly released Cleantech products is through the technology services companies that already have a long-standing relationship with the target customer. The Big Technology services companies -- Tata, Cap Gemini, Infosys, Accenture, others -- as well as smaller tech services companies, already know the buyers and influencers at the customer, and can use that knowledge to get a first meeting. As a result, they are, or will, offer Cleantech Practices based on implementation partnerships they have signed with the early stage product innovators. So, if you're looking for where the hiring action is in Cleantech, go where the money is. Go find your opportunity with the technology services companies.

Thus goes the argument. On the surface, makes sense. Does it hold up right now? Let's take a look. A quick check of Tata's website shows the company has an Energy product company, Tata BP Solar (http://www.tata.com/company/profile.aspx?sectid=CYU/8i5KfvM=) consisting of an alliance between Tata and BP Solar, one of the largest solar energy companies in the world. Cap Gemini shows an Energy, Utilities and Chemicals practice - http://www.us.capgemini.com/industries/ind_overview.asp?IndID=3. However a universal search of their website using the keywords 'Cleantech' and 'GreenTech' delivers only two items. Once you get past the nice picture of Tiger Woods and the invetiable "it's tougher than ever to be a Tiger caption below" Accenture's Energy practice is focused on serving the oil and gas sector including upstream, downstream and oil service companies. A universal search on the company's website with the same keywords results in one hit, in French.

So, just who are the Cleantech services companies? We know the products are out there. The global market research and investment firm The Cleantech Group™, claims there was a total of $2B of Cleantech venture investment in Q2 2008 alone in North America, Europe, China and India - an all-time record. U.S. companies alone received a record $1.49 billion in 54 financing rounds, accounting for approximately 74 percent of the total.

California-based companies received approximately 40 percent of Cleantech investments, with a record $794 million in 21 investments.