It’s all so easy when you know how

After a gentle introduction over the weekend, Monday was the first full day of the Clean and Cool mission. And what a full day it was. Starting with a masterclass on doing business in the US, then two visits to companies, a panel discussion on the future of cities and ending up with a networking party hosted by entrepreneurs Michael and Xochi Birch.

The masterclass provided the companies with an insight on what it takes to successfully operate in California; from advice on banking to tips on the culture. We had a range of helpful advice on legal issues from Lou Soto of mission sponsors Orrick, banking from Matt Maloney of Silicon Valley Bank, working in the California culture from Julia French of Covered Communications, the help available to UK companies trying to do business in the US from Jaclyn Mason of sponsors UKTI, and on communications in the US environment from Fran Lowe of Lime Street Studios

A very solid introduction full of useful tips of immediate use to the companies.

Common themes were:

The need to be physically present to do business in Silicon Valley. You need to have a US business entity in place, and if you are going to succeed the top management team need to be based in the area. The network is key. A constantly repeated phrase was “you need to be part of the ecosystem”.

Understand that venture capital is not a banking relationship. You are going to work very, very closely together, so you had better like each other. Personal relationships matter.

The financial crunch has had a big impact on venture capital. Funds are smaller, and deals are fewer. A lot of companies in cleantech were invested in 4-5 years ago, trying to bridge the ‘valley of death’, and those continue to be supported. This has left an early stage funding gap with projects getting stuck in the lab for longer. Investors are looking for capital efficiency and more reluctant to invest in projects with high capital requirements.

Make sure that you get the message across in the very short window of attention that you have. It is not about the technology but the problems you can solve. Tailor the message to the audience, explaining to them why this is important and why they should care?

Find a way to address the questions in the VC’s mind:

• Market risk – is there a big enough market for this product to be interesting?
• Execution risk – can you deliver the market?
• Team risk – do you have the right people to deliver?
• Finance risk – how much money is it going to take to get there?

Julia French gave a ‘top 5′ list of things to remember that made everyone think. Her top 5 was:

1. e-mail – this is a fast paced culture. You do not have 2 days to get back to people, you have 20 minutes. Speed is critical. In your messaging focus on who, what, when, where and why? Then what are you offering and what do you want? Know the coffee shops so you have a place to meet.
2. Sometimes British companies are so well organised it seems suspicious. Provide the ‘we are British’ context so that people can understand where you are coming from. “If they can’t map you, you fail”.
3. Don’t be afraid of ‘no obligation’ conversations. People need to know you. Not every conversation needs to be about business.
4. Be more relaxed. Otherwise you can appear to be insecure.
5. Put your business model on the first slide. You actually have proven business models, many people looking for funding don’t.

Then on to visits to HP Labs and Serious Materials. At HP there was a lively discussion about the way in which HP is building sustainability into its business model, and how such a large company keeps focus both on ruthlessly cutting costs and delivering product and creating innovative ideas and producst that are right at the edge of what is possible. Many of the companies on the mission look forward to to having to solve that particular problem.

At Serious Materials CEO Kevin Surace explained how his company brought innovation to construction products that have remained the same since the 19th Century with low embodied carbon, low impact and very high performance drywall panels, and also how you have to be responsive to the market – switching to high performance windows for the replacement market when the new build market for drywall collapsed. He also gave his views on how venture capital works in the Valley in a brilliant off the cuff talk that could have been titled ‘Everything You Ever Wanted To Know About Venture Capital But Were Afraid to Ask’.

The panel discussion followed one of the emerging themes of the week – future cities, with a distinguished panel peering into the future. Tom Cheshire from Wired has provided an excellent overview of the debate in his blog.

Finally, we reached the long anticipated networking party for yet more discussion. The highlight of the evening was definitely the pub quiz with Oli Barrett as Quiz Master. Congratulations to the Bar Flies for edging the victory, to which my own knowledge of late 1940’s kitchen appliances made some small contribution.

Richard Miller
Technology Strategy Board

This entry was posted on Wednesday, February 24th, 2010 at 2:01 pm and is filed under TSB. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.