Nancy Floyd is the founder and managing director at Nth Power, a venture capital firm established specifically to invest in clean energy startups.
See the first part of Breaking Energy’s conversation with her here.
How did you feel when one of your portfolio companies, Evergreen Solar, filed for bankruptcy last year?
We got a great return out of Evergreen Solar. Our investors did extremely well. We are always trying to invest ahead of the curve.
I’m very proud of the founders. We backed them early on when they almost couldn’t get any money. They did really well. They did well for their shareholders – they didn’t take any federal money – they created a lot of jobs.
But it’s the natural cycle of things that they started when the industry was less than $100m a year. It’s now at $80 billion a year. The market has shifted and they helped the industry to evolve. If we hadn’t done well on that investment I might have felt badly.
Q: Was there too much investment in solar to the detriment of other technologies?
More money went to solar than should have. There were too many solar companies that were funded and a lot of people didn’t see what was going to happen with the Chinese manufacturers. I don’t think it’s come at the expense of other sectors. Solar is very capital intensive, but I don’t think anybody has been hurt by the exuberance in solar.
What would you do differently with the benefit of hindsight over the past two decades?
China and India were not on our radar screen in 1993. I’d like to think that we had had that kind of vision. But we really had no inkling as to the kind of growth that they would be experiencing and participate in this market as innovators and developers of new technology.
There were external events that I would have liked to have seen happen that’s more on the policy front.
Clean tech and new energy technologies are viewed as a fringe industry. It’s still viewed as an alternative lifestyle industry. It’s amazing to me after all this time that’s the case. We just have to continue to show results.
But in terms of things I could have done differently, I couldn’t be happier. At Nth Power I’ve had more success than I ever dreamed of.
Q: How would a federal energy policy benefit industry?
My concern is that as an American, we lost the lead in wind in the 1980s to Denmark, we had the lead in solar and we lost that in terms of manufacturing.
But I am concerned with the lack of any predictable policy that we will not only lose the manufacturing, but the innovation. Particularly when China is getting to 2m patents a year with a heavy focus on clean energy, I’m afraid we’re going to lose our lead in innovation. That would be deplorable.
Energy policy would help because entrepreneurs want to locate where there is predictable policy and you just have to look at what happens to the industry when the Production Tax Credit and Investment Tax Credit come and go.
You can’t run a business that way.
I almost don’t really care what the policy is, as long as we’ve got a 10-year horizon and we know what we’re investing against.
Q: To what extent can Nth Power take credit for pioneering in the clean tech sector?
It should be a humble answer – we’re the ones funding the companies, not building them. You have to give most of the credit to the entrepreneurs. If we help get new energy technologies on to the radar screen great, but our jobs aren’t as easy as they look. But having said that we’re not the ones in the trenches doing the work. We do the supporting role.
I had no idea Nth Power would be so successful. We did seed the effort in some ways it’s something I believe in so strongly. It’s very validating and every company gets us closer to the path we need to be on.
All we know is new energy technologies and we are still incredibly bullish on it because it’s not a nice to have. It’s a must have. We can’t continue down the path of status quo things will change, they have to change and the markets are enormous. This is what we get excited about.
It’s fair to say that we haven’t had the Google of new energy tech yet, but inevitably we will.