29 Sep 2010   |   News

InnoEnergy sets out to attract investors

The EIT’s energy project begins its task of creating a European ecosystem for funding sustainable energy start-ups today.

The InnoEnergy Knowledge and Innovation Community (KIC) is making the first moves to attract venture capital support for its mission of modernising Europe’s energy sources, sponsoring a meeting of start-up companies and potential investors in Stockholm today.

InnoEnergy, one of three KICs set up last year by the European Institute for Innovation and Technology (EIT), wants the meeting to become an annual event that will be a European rallying point for entrepreneurs and investors in sustainable energy.

This will be central to InnoEnergy delivering on its business plan of creating 15 new companies, launching 25 new products and services, registering 20 new European patents and transferring three of these to start-up companies, each year.

Bringing together entrepreneurs and investors is essential to InnoEnergy’s goal of developing the ideas, products and start-ups that will underpin a shift to sustainable energy. “Capital is a key element of success when building innovative, entrepreneurial companies,” says Magnus Rehn, business coach at STING, a Stockholm business incubator that is an associate partner of InnoEnergy in Sweden. “At the same time this event [is] a place to share experience and encourage the companies to understand and follow the market trends,” Rehn said.

At the Cleantech Venture Capital meeting in Stockholm 25 companies, in search of  €56 million in total, will present their business cases. But the more ambitious goal for the day is that, “Most of the participating companies will initiate discussions with investors, leading to successful capitalisation of a large portion of them within 6-12 months,” Rehn says.

The event is featuring companies looking for funding ranging from €500,000 to €2 million, and includes photovoltaics specialist Solarus; Cortus, which is commercialising technology for generating gas from biomass; and Biorecro, a specialist in carbon capture and storage.

Sustainable energy needs international VC

In between the elevator pitches, the programme features roundtable discussions of the ins and outs of innovation and venture capital investment in alternative energy, with experts from all over Europe, including German venture capital firm RWE Innogy GmbH, Belgium-based Capricorn Venture Partners and the French VC Total Energy Ventures.

The internationalisation of venture capital is essential for the success of InnoEnergy and European sustainable energy start-up companies. “Barriers that exist today in the venture capital sector need to be removed - Spanish investors shall be able to meet clean tech companies in Sweden and vice versa,” Ramon Wyss, Vice-President of KTH Royal Institute of Technology and Coordinator of InnoEnergy in Sweden, told Science|Business.

The InnoEnergy KIC should be viewed as a large pan-European start-up company with stakeholders from universities, research centres and industry, believes Elena Bou, who is responsible for InnoEnergy at ESADE Business school in Barcelona.  She notes that InnoEnergy is run like a business, has the legal status of a company, is focused on its market and operates as a multinational. This year InnoEnergy is spending €50 million getting of the ground, next year when it is fully operational the budget will rise to €110 million.

Earlier this month InnoEnergy announced the appointment of its first permanent CEO, Diego Pavia, a Spaniard who is the former head of the Spanish and South American business of the IT services company Atos Origin. Pavia, an engineer with previous experience in the energy sector, picks up the reins from Hans- Jörg Bauer, who as interim CEO masterminded the formation of InnoEnergy.

Thinking from small to large

When it comes to creating start-ups, InnoEnergy’ philosophy is, “Thinking in terms of ‘from small to large’ as a precondition for success,” Daria Tataj, a member of the EIT Executive Committee and a managing partner at EMF (Enterprise Management & Finance) and assistant professor of management at the Warsaw University of Technology Business School, told Science|Business.

Anyone can run a small business or a large business, Tataj says. The hard bit is getting from small to large. “This is the [critical objective] that InnoEnergy will adopt in order help attract entrepreneurs with global ambitions and smart venture capital.”  The key, she says, for InnoEnergy to deliver outstanding European companies with breakthrough technologies and business models over a medium to long term time horizon, is the combination of the right people and smart capital.

By smart capital Tataj means venture capitalists who provide not only funding but also have understanding of technological developments in a given area, understand the competitive landscape and so can provide market intelligence, and are capable of dealing with the management dynamics and governance challenges that a fast growing venture faces.

Reinforcing the knowledge triangle

InnoEnergy is made up of 11 companies, 10 research institutes and 14 university partners, covering the whole energy mix, and with strong links to local governments and the venture capital community.  The network is organised around a number of partners in each of six countries. Each country has a headquarters where staff from the different member organisations come to work together, face-to-face. The national groups are: Poland Plus with headquarters in Krakow, which works on clean coal technologies; the Benelux in Leuven and Eindhoven, which specialises in intelligent and energy-efficient buildings and cities; Iberia, based in Barcelona, works on renewable energy; the Alps Valleys, in Grenoble, investigates sustainable nuclear and renewable energy convergence; the Sweden group, in Stockholm, specialises in smart electric grid and electric storage; while the Germany group, in Karlsruhe, is focusing on energy from chemicals.

There are also two industrial partners at KIC level, which have interests in all the national groups and contribute to all the research fields: These are the French electricity company EDF, which collaborates in generation, distribution, energy sales and trading, supply and energy services and Total, the French oil and gas company.

Energy faculty of Europe

Apart from priming Europe’s venture capital sector to invest in sustainable energy technologies, InnoEnergy is involved with equipping energy engineers and technologists with an entrepreneurial mindset. This will be achieved through course run jointly by technical universities and business schools. At the beginning of September the first one-week course “From science to business” to introduce PhD students to entrepreneurship took place at ESADE. In the next five years, “More than 1,500 scientists and technologists will pass through the business school,” as part of the InnoEnergy training scheme Bou said.  

Jan Blom, interim manager of the Benelux InnoEnergy group says the vision is to create the “Energy Faculty of Europe” to educate the next generation of experts. The European “energy engineer” must be interdisciplinary and entrepreneurial, mobile and international, prepared to meet future challenges and to make use of future opportunities.

Never miss an update from Science|Business:   Newsletter sign-up