Nancy Floyd is the Founder and Director of Nth Power, a venture capital firm based in San Francisco that is the first and most experienced venture capital firm currently funding promising startup companies in the field of energy technology, materials and other related businesses. I recently spoke with her about why climate change legislation is important to our economy and how Environmental Entrepreneurs (E2) is trying to get it passed in the United States Congress.
Q. How did you become involved with E2?
A. I have been involved with E2 almost since it was founded. I knew of Bob Epstein and had met him. I thought the idea of bringing the business voice and entrepreneurs to the energy and environmental discussion made a lot of sense.
Q. How have you been active in the organization?
A. I've been involved in a number of ways over the last six years. I've spoken at E2 EcoSalons, which are held three or four times a year and provide members with information on important environmental issues. I've testified in front of the California and Oregon State legislatures, and I've been on Capitol Hill a number of times. I testified in front of Congress as an E2 member. Now I've been tapped to do some radio and television work to raise awareness of the American Clean Energy and Security Act. Everything I've done has been focused on legislation and related in some way to climate and energy, be it energy efficiency and independence, renewable electricity standards or cap and trade.
Q. How does E2 work to help get legislation passed?
A. E2 espouses the idea that economic development and environmental stewardship go hand in hand, and uses its members to get in front of policy makers. This is important because the business voice is powerful, especially when it's delivered directly by leaders in the energy and environmental field. E2 has been amazing at knowing how to use its members' time efficiently and at organizing trips to Capitol Hill to testify at key moments in the legislative process. E2, in conjunction with research from NRDC, is great about knowing when we are really needed in the process. They use our time so well and effectively. We all want to help more, but we have our day jobs, too.
Q. Why did you start Nth Power?
A. I am serial entrepreneur. I started three companies before I started Nth Power. In 1982, I was one of the first wind power developers. I started a telecommunications company that was sold to IBM. I actually started my career as a regulator. There is a significant regulatory component in renewable energy, so that background has been helpful. I started the telecommunications company at the point when energy was going through deregulation, and I saw the role that technology was playing. I thought that if there were an industry that needed new technology, it was the energy industry.
Q. So is that what prompted you as a venture capitalist to invest in renewable energy rather than, say, telecommunications or another technology?
A. In 1992, it seemed that the handwriting was on the wall. I thought there was going to be a fundamental change in energy power worldwide. I started Nth Power to fund the technology that would make a difference and play a role in disrupting the traditional energy landscape. In fact, in 1993, when I started Nth Power, there was no venture capital investing in renewable power or clean-tech. I saw an underserved technology and a market need, and I had a personal passion for it.
Q. Can you tell us about your most recent investment?
A. Sure! It was just announced that we have invested in Hara, a software firm that calculates a company's carbon footprint and applies audit-grade rigor and the ability to leverage best practices to environmental and energy management. It's certainly positive the number of companies worldwide that are reporting on their energy and environmental footprint. Hara's software captures carbon footprint data and allows you to manage that data and figure out what you can do to further reduce your footprint. It provides a transparency but also an ability to innovate in the whole energy and environmental arena. Their customers include the city of Palo Alto and Coca-Cola.
At some point this type of environmental reporting will become mandatory, but even in the absence of regulation, you still have a lot of the top Fortune 1000 companies reporting that information. They understand that it is good business, and they have major shareholders that are demanding accountability and transparency around these issues. It's the right time for a company like Hara. And they believe in what E2 believes: that what is good for our environment is good for business.
Some of the other well-known companies we've invested in are Evergreen Solar http://www.evergreensolar.com/ and Comverge http://www.comverge.com/. We've invested in smart grid companies, clean fuels, energy-efficient buildings, advanced materials related to energy, advanced batteries, energy management software and fuel cell technology. It's quite a broad group.
Q. I hear a lot about how the United States is falling behind other countries when it comes to clean-tech and renewable energy innovation. What are your thoughts on this?
A. I see a lot of innovation coming out of the United States. The problem is that, as companies become successful and want to scale up, the lack of long-term, stable and supportive policy in this country has meant that we have lost those businesses to other parts of the world. Historically, the innovation has happened here, and the scale up and expansion has happened outside of the United States. It's critical that we pass climate legislation and renewable electricity standards at the federal level.
The current administration is incredibly supportive of a clean energy economy. They understand that in the long-term energy policy will be good for the economy, but we are seeing a stalemate in D.C. If we don't get this legislation passed, we will continue to fall further behind in terms of innovation, jobs and the long-term business that is created. We are losing solar to China. We lost wind to Denmark and Spain. We lost solar to Germany. But now China is up and coming in all of these sectors. We've got to do something on a policy level. It's absolutely critical we get legislation passed.
I was in Boston recently listening to a discussion about the upcoming international climate negotiations in Copenhagen, and there was an environmental policy professor from Tufts who spoke. He said that if we change the focus in Copenhagen to a clean development treaty from a pollution treaty, we would think so differently, and the world would think so differently, about what we're trying to do, which is create a new economy. Instead, it gets positioned as a tax. Well, no, it's not. It's a key to a new economy and to new jobs. That's the message that E2 members can effectively tell, because we're the ones who are writing the paychecks for these businesses. We know.
I'm Commissioner of the Oregon Economic Development Commission. At our last meeting, we approved some support for a 1,000-megawatt wind project in Oregon. The market for renewable energy in this country has been growing for the past decade at a rate that is akin to the PC and wireless during their heyday. It's been a decade of this kind of growth and there is no end in sight. We still see a phenomenal growth rate even in the downturn. This can be the economic engine for this country. It can be for technologies deployed in this country, as well as for export. But there has to be stable and long-term energy policy to get this economic policy turning.
Q. How will your business be affected if the climate change bill passes?
A. I would say, more importantly, how will this country be affected? It's one of the key pieces of legislation that will be required for the United States to be a real player in renewables, energy efficiency and clean transportation.