
The Energy Startup Conundrum - apsec112
http://www.technologyreview.com/qa/544611/the-energy-startup-conundrum/
======
andy_wrote
It sounds like the problem Fong faces is that the industry she wants to work
in is very capital-intensive. In that case, does the startup/VC/equity model
make sense? Wouldn't it make more sense to be attached to a large company with
big balance sheets, access to debt markets, and a good credit rating to get
this large capital expenditure funded? (Without having any first-hand
knowledge of these places, I'm sort of thinking of places like Google X or
Bell Labs.)

Perhaps the issue is a lack of corporate/financial structures that allow
people who want to work in capital-intensive industries to enjoy some of the
nice aspects of working at a small startup: casual atmosphere, lack of
corporate hierarchy, openness to change and innovation. I don't know whether
that's something that can be wholly remedied - you can't be "move fast break
stuff" when you're building something like a bridge. But I'm not convinced
that the usual "startup" model is the best way here.

~~~
exelius
I'll answer your question: no, the venture model does not make sense in
capital-intensive industries. The entire premise of venture investing is to
beat established competitors by leveraging technology to be more capital-
efficient. It wouldn't work otherwise; because using the Internet as a
delivery pipeline is exactly what gives most startups their cost / strategic
advantages. Infrastructure investment is expensive, and very few investors are
willing to float you a billion dollars without expectation of return for 10+
years. VCs want to make lots of small bets on low-capital businesses and hope
one strikes gold.

And it just so happens we have a funding model for capital-intensive
industries: government grants and tax incentives. But the nature of the beast
is such that we can't have a huge number of companies all trying to do the
same thing. That does mean that success is ultimately a result of your ability
to get what you want out of the government system, and hope there aren't too
many powerful groups angling for the same thing. That's exactly the model that
VC / startup is trying to get away from.

That's the thing about capital-intensive industries: generally the problems
and solutions are not difficult or especially unique. The only reason there's
not a hotbed of competition in those areas is because funding is the
chokepoint. And you're right; it's more about quality of execution than
"getting lucky". Some things you have to get right the first time, so the
trial-and-error approach of VC-funded companies is probably not the right
approach.

EDIT: Also, to answer your point about being attached to a "BigCo", you're
absolutely right. This indeed does happen -- you just never hear about it
because large companies like to keep their R&D projects secret. They don't
need to publicize their achievements to establish a customer pipeline because
they already have one. In fact, most advances in infrastructure technology are
funded by large, established companies in a way that makes them seem
evolutionary.

~~~
adenadel
I think you're generalizing what current software venture capital looks like
to all of VC. Historically the types of companies discussed in the article did
get funding from VCs (Fairchild Semiconductor, Intel, Genentech, etc.) Maybe
VCs are caught up on the appeal of the world of bits over the world of atoms.
Software companies certainly require less capital, but that doesn't mean that
companies with a physical product can't be huge paydays as well. I also don't
think that requiring a large amount of capital means that problems and
solutions are not difficult or unique. Biotech requires lots of capital, but I
don't think anyone would say biotech products are easy to create or cookie
cutter to come up with.

------
ChuckMcM
Glad to see she is making progress. I tried unsuccessfully to get a project
off the ground at a very large search company which had a data center in a
very windy area right next to the Columbia river :-) Where the compression
tanks would have heat exchangers that sat in the river and would use data
center heat to pre-charge the decompression process (double win, free data
center cooling _and_ energy).

Unlike Fong I had heard Tata was going to use air motors from a French company
to power cars, I just wanted them to turn generators. I discovered that the
air motor was a hoax. Which put me in the same spot (designing your own
motor). And that pretty much killed any hope of getting funded.

------
beatpanda
If you want to help improve the economics of running a new energy company,
come work with us:
[http://www.genability.com/careers/work_with_us.html](http://www.genability.com/careers/work_with_us.html)

------
Marcomasino
Nov 2012: "Peter Thiel, Bill Gates, Khosla Get Behind Energy Storage Start-Up
LightSail in $37M Deal"

[http://blogs.wsj.com/venturecapital/2012/11/05/peter-
thiel-b...](http://blogs.wsj.com/venturecapital/2012/11/05/peter-thiel-bill-
gates-khosla-get-behind-energy-storage-start-up-lightsail-in-37m-deal/)

------
titanomachy
> We need energy storage in the terawatts... we are close to half a megawatt.

Does she mean megawatt-hours? Or the rate at which energy can be transferred
into their tanks? Power = energy / time, and watts are a unit of power, not
energy.

~~~
cwal37
If I had to guess she's talking in terms of each individual tank/unit set-up.
So, one tank has a capacity or power rating of 500kW (capacity in the sense of
the way a utility refers to size/ability of generating units). This link[1]
possibly covers some of the confusing terminology here, and why it is that
way.

EDIT: Scrolling to the bottom of their homepage[2] explains it, their system
components are independent of each other.

[1] [https://gigaom.com/2012/01/04/how-to-compare-energy-
storage-...](https://gigaom.com/2012/01/04/how-to-compare-energy-storage-
projects/)

[2] [http://www.lightsail.com/](http://www.lightsail.com/)

