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Last night, I attended a networking event, which included a panel discussion, on green / clean technology. Although I  made it to the event 45 min late, I managed to hear some interesting and counter-intuitive knowledge that I wanted to bestow upon the readers of this blog.

The panel included some founders of "green" companies, some first-rate VCs, the director of NYC Acre, an incubator for cleantech startups, and an academic from Columbia. 

1. Department of Energy (DOE) grants and loans are not all they are cracked up to be. It seems that many companies are stoked by the idea of either free or cheap money from Uncle Sam. Some VCs bemoaned business plans that relied solely on stimulus money.

The key takeaways that all the panelists agreed on was that:
a. Getting money from the government was actually much more competitive than one would think, even more so than traditional capital raising from angels or VCs.

b. If your company is deemed worthy for these grants and low cost loans (Tesla and Fisker, two transformative electric car companies, can count themselves in that category), beware the requirements imposed on your business for taking the money. Not surprisingly, there are strict regulations and guidelines that your business will need to follow

c. Unlike a check from a VC that can show up in your bank account through a wire transfer in under 24 hrs, government funding can take up to a year after initial promises are made and hands are shaken to reach your balance sheet.

2. Getting in bed with utility companies can prove more difficult than doing the same with Megan Fox. Experience with companies that pitch efficiency and cost savings to utilities has shown that it might be extremely difficult for start-ups to gain traction. When utilities strategize about their future plans, they look out 40 - 50 years as opposed to the typical 1 - 5 years for most other types of companies. Start-ups trying to sell a product or service might get frustrated at the multi-year decision making process that utility companies must go through to evaluate ALL the options. Even worse, start-ups risk running out of capital before any deals are signed.

3. The US government should price different sources of energy by their destructive value. I wont go into too much detail here, but the panelists agreed that the US should take some lessons from the EU, who prices dirty sources of energy by their true cost and avoids subsidies for oil, coal and other "dirty" energy sources. Governments should target better consumer behavior through the use of incentives. Europeans pay for more gasoline than we do. The prohibitive cost of gasoline has led Europeans to adopt patterns of using much less of it...just look at one example of a car that is considered sexy in Europe.
 4. Don't try and take the world by storm, instead work on improving it one innovative solution at a time. Most VCs would rather invest in companies that can provide immediate value with a chance at getting their investment back (plus a 8 - 10x multiple) as soon as possible. The news wires and blogosphere may paint a different picture than reality, but most VC money seems to be invested in companies that can provide immediate value. There are certainly deep-pocketed VCs who invest in transformative companies and are somewhat comfortable with long-term return horizons, but that does not seem to be the norm. Hundreds of millions of dollars poured into electric car companies sure makes quite the headlines though.

5. Invest in the smart grid and low cost LED lighting solutions. When asked what to invest in with a time horizon of 3 - 5 years, the most popular answers were the smart grid and LED lighting, which is set to drop in price precipitously over the coming few years.

I will end this post with a book recommendation from one of the panelists: Switch: How to Change Things When Change is Hard. I haven't read it yet, but will offer up a review once I do.

PS If the picture at the top of this post doesn't make any sense to you, watch Its Always Sunny in Philadelphia from beginning to end.