PUGET SOUND BUSINESS JOURNAL- November 6, 2009

By Byron McCann and John Pierce

There’s no doubt that the global meltdown has fundamentally altered the prospects for current and long-term economic growth in our region.

Although the region was already somewhat of an outpost for large multinational corporations, the recession has further shrunk the ranks of corporate giants here in the Pacific Northwest. Those that remain face intense pressure just to maintain market share, much less increase it dramatically. Prospects for the meteoric growth we saw in the ’90s are gone.

Luckily, our region (including Oregon and Idaho) is blessed with a new cadre of entrepreneurs, startups and innovative mature businesses that are poised to jump-start an economic rebound that we believe will allow us to create jobs, increase state revenue and pull us out of the trough we’re in.

This industry we’re talking about is clean technology. It’s composed of people and companies developing and commercializing new, renewable, sustainable and “clean” approaches to fuels, electricity, energy efficiency and materials.

While both of us have spent decades investing in and helping launch startup technology companies, we’ve noticed some key differences between the needs of early-stage software and hardware companies and today’s emerging clean technology companies.

While it is certainly a challenge to launch any new venture, the barriers to starting a software or Web 2.0 company today are far lower than they were 10 or even five years ago. The access to open-source code, the wide availability of API’s (application programming interfaces) and the adoption of platform standards enable software and web entrepreneurs to create and deploy new products and services much more quickly and inexpensively than before.

In addition, promotion and distribution has never been easier. The ubiquity of the web allows customers to directly download applications to PCs, phones and other digital devices. The popularity of social media virtually erases the need for capital for advertising or promotional campaigns. We don’t mean to trivialize it, but it doesn’t take much to launch a web service these days.

Conversely, clean technology startups face more daunting and complex challenges — almost diametrically opposite those of their web peers.

First, the research and development needed to create new forms of energy is exponentially more costly and time consuming. Then, even if you can get an innovation to work in the lab, it’s extraordinarily complex to scale it to the level needed to perform at utility or commercial levels.

In addition, there are significant regulatory, safety and policy issues that must be addressed before certification. Finally, the capital costs of developing new industrial scale energy products are in the billions of dollars.

In short, creating a new form of renewable energy is much different than coding a downloadable app for an iPhone (although I’m sure we wish it could be that simple).

That’s why more than two dozen business leaders in the Pacific Northwest came together to launch the region’s first Clean Tech Open (CTO) competition. The CTO is far more than a typical business plan competition. Rather, it’s a community of nearly 100 volunteers from across the spectrum of venture capital, legal, science, environment, policy — you name it. These business leaders committed time and resources to help clean technology entrepreneurs create or evolve business models to support their clean technology idea, raise money, find strategic partnerships and launch a business.

On Oct. 29, the journey culminated in the first Pacific Northwest Clean Tech Open awards gala in Seattle, where three companies out of an initial pool of 56 were awarded nearly $50,000 in cash and in-kind services each. These three companies will go on to compete in the national competition.

Even those that were not named finalists emerged from the process with a refined business model, practice in presenting to funders, and a leg up on the competition for venture capital.

A vibrant clean technology industry in our region increases venture capital, job creation, income, tax base and GDP at a time when we need high growth in order to rise out of the recession. Traditional industry alone won’t be able to do it big enough or fast enough.

BYRON MCCANN is a founding partner at Ascent Partners Group, a Seattle-based investment bank advising technology entrepreneurs. He can be reached at 206.626.6340. JOHN PIERCE is a member in Seattle of the Wilson Sonsini Goodrich & Rosati law firm, where he is a leader of the firm’s energy and clean technology practice and can be reached at 206.883.2500. McCann and Pierce are co-chairs of the Pacific Northwest Clean Tech Open.