Two of Alacrity Canada's Senior Advisors talk to our Cleantech Program Director and Managing Director about the state of the clean technology sector in Canada, based on their experiences in the industry, touching on what companies are getting right and what they still need to improve upon in order to get their innovations to market and solve the world's climate problems.
5:35 - Rich: I think we can all agree now that it's essential to our planet. We know there's a problem that we have to fix and the technology side is just a massive opportunity. As humans we're good at innovating when we have to, and now we have to.
11:00 - Peter: There is the technology mantra of "move fast and break things" but in cleantech you don't necessarily want to actually have incumbents doing that because in the cleantech industry entrepreneurs are working with technologies and systems that quite literally keep the lights on. So we really need to educate our technology communities so they understand that the customers they are working with are often very risk-averse customers coming up against very disruptive technology.
12:30 - Peter: I wish investors were more understanding of some of the challenges cleantech companies are up against. This friend of mine said to me, 'Well Peter, to me they've got long development cycles, long sales cycles, lumpy revenue, I wanna run in the other direction'. So I'm looking forward to our investors embracing some of the unique characteristics of cleantech. But customers are facing disruption. So my hope is that customers become aware of that and embrace it.
13:30 - Peter: One way to make investors feel more attracted to cleantech is through some de-risking mechanisms. So one thing we promote at Alacrity is pilot funding. Once investors or clients see a project that has been successful in the field the stakeholders then see that a lot of the risk has been removed from the situation. We also really need to help the companies scale up. Very few cleantech solutions are very stand-alone, so there are often multiple actors who need to be coordinated.
14:50 - Cec: A lot of costs over the years have come down as more actors enter cleantech you get economies of scale. We're also looking for opportunities in industries that we hadn't really previously thought of bringing cleantech into, so there are more solutions being offered by cleantech. And as each segment of the industry grows economies of scale are bringing costs down and making cleantech more competitive with 'old-tech'.
16:20 - Rich: There was a lot of scar tissue left in the investment community after the pain that many early cleantech investors experienced in the early aughts as the sector really came into being. So when I started working more seriously in cleantech in 2015/2016 none of the investors really wanted to talk about it. But that has really changed. It still is predominantly courageous investors taking the big risks, but I think if we look back on this time we'll see that there were some amazing returns achieved.
18:30 - Burak: This plastic fund that we helped implement at the start of this year really helped to create commercial value especially in small communities. And that is really one of the key benefits of cleantech and of our program. The capacity it has to generate really high value jobs across geographic and economic regions.
22:20 - Peter: In the mid-2000s there was the Tech Wreck and a lot of investors flooded to cleantech. But cleantech generally speaking turned out to be much more complicated to implement than those investors thought. It turns our that integration and adoption for cleantech is quite difficult.
24:50 - Rich: Cleantech is actually very measurable. So you can't fake it in cleantech and that's something people need to get over a bit. It's also important that people have ways to demonstrate and pilot their technology using funding, especially government funding, because if you don't do it in real life in the real environment then you'll always lack credibility. So you need to see these technologies and projects actually working, especially the bigger customers. They can't just depend on what worked in another area of the world.
26:50 - Peter: The biggest threat to cleantech is execution risk. It's back to that customer unhappiness. These are conservative customers and if you stumble, they're not coming back.
28:50 - Rich: The biggest threat to cleantech is the status quo. If people aren't forced to make changes sometimes they don't. But if there's continued risk aversion and lack of funding at an investor level and government level then that's the biggest threat to the industry growing in a meaningful way.
31:30 - Cec: Really understanding their product and their market. Really to succeed you need to spend more time up front really understanding who your early adopters are. How you're going to get your product to market to prove and showcase what you do.
33:50 - Peter: The vast majority of customers are not easy adopters. They need to have an easy path to adoption.
33:30 - Rich: I would say that commercialization, marketing and sales are the biggest issues. And the things that we need to get right more often in order to succeed. Part of that is because a lot of these cleantech companies are really heavy technology, heavy science companies. But you need to go and find that help and bring in those skills. If 40% or 50% of an organization isn't related to sales and marketing, if 90% of your team is still working on the R&D side then you can assume that you're not going to be growing revenue in a meaningful way. So many companies have amazing technology but it doesn't go anywhere if they aren't able to build meaningful revenue. So I can't say enough how important it is to focus on sales and revenue.
38:25 - Burak: Firstly, you really need to get intercultural communication right, especially when you're looking to start selling on the international stage. Secondly, you need to work on your communication of your value proposition, and thirdly, develop a good sales cycle so you know what customers are asking for. And don't fall in love with your own idea/solution.