Proven strategies to snare venture capital for your smart grid startup

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By Christopher Noonan

Christopher Noonan works at the Institute for Energy & Sustainability in Massachusetts. Last year he hosted the Institute's Smart Grid Venture Showcase. In that capacity, he had a chance to see how companies positioned themselves to attract money. And to see which strategies worked and which did not. If you've ever had thoughts about starting a business; or if you've started one and you're wondering how to attract venture support, you'll want to read on.

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Venture capital can increase your chances of going from an entrepreneur with a great idea to company with millions of customers. Successful smart grid start-ups, such EnerNOC and Silver Spring Networks, started with a dream, but early on learned how to turn their dreams into committed dollars.  With ever-increasing competition for investment money, what are the proven strategies an entrepreneur can use to increase investor interest and cross the valley from dreams to dollars?

The Institute for Energy & Sustainability's Smart Grid Venture Showcase recently brought together 12 different companies under a simple premise: Make a 10-minute investment pitch to our audience. If successful, walk away with the capital needed to scale your products and services to reach market success.

It starts with personality

Attracting those dollars starts with personality – a captivating story with warmth of character. It strengthens with identifiable stories of success, customer feedback and noteworthy projects. And it moves toward commitment after a string of interactions, where investment firms get familiar with you, your team and your technology.

Showcase Roundtable panelist, Stephen “Zam” Zamierowski, Director of Deloitte Services, offers a unique perspective of why this resonates with investors, "For me, I am not a scientist, I am an investor.  If a smart grid company approaches me and starts getting excessively technical – I tune out.  I want to hear the stories, who you are, where you came from, are you passionate about your technology? Then, if it’s right, I'll connect with tech folks and seek their advisement on your product or service."

"It is not often an investor is won over by an elevator pitch or a 10 minute presentation, often it can be counter-productive to be overly aggressive," describes Andrew Lackner, VP of General Electric Venture Fund and Ecomagination Campaign.  "Investment is not only a financial commitment, but it is also about entering into a relation with another individual or company. Investment is a long term commitment."

Recurrent themes investors look for

Following the investment pitches, an experts roundtable discussed the recurrent themes that investors look for:

• Ability to yield returns
• Relationship-building skills
• Value to customers
• Ability to communicate strengths and mitigate risk
• Long term planning

The effectiveness of the above strategies was clear by the success of participating companies:

• Blue Line Innovations’ "Power Cost Monitor" is available for retail sales at Lowe's, Fry's and Amazon
• Amperion announced a deal with AEP to supply Broadband Carrier Line technology
• Burning Hollow Technologies forged relationships with other smart grid companies to offer a suite of energy management solutions

Page 2: From roadshow to success story