‘Data is growing exponentially and choking data centre floors and IT budgets alike,’ said Sunil Dhaliwal, general partner, Battery Ventures, and new GreenBytes board member. ‘Customers will simply not stay afloat amid the rising tide of digital data unless they radically re-shape the traditional equation that governs the cost, performance, power consumption, and management of their storage. It is easy to see why GreenBytes’ capacity-optimised storage technology is a getting an excellent reception from customers, partners and industry analysts. This is a veteran team with a powerful technology, and we’re pleased to work alongside them as they pursue the fastest growing segment of the $20bn network storage market.’

‘We’ve hit an exciting set of milestones today with the announcement of Battery Ventures’ investment, and the introduction of our latest product line, the result of years of intensive R&D and work with customers,’ added Bob Petrocelli, CEO of GreenBytes. ‘We’re looking forward to delighting our customers and channel partners with our revolutionary take on deduplication and capacity-optimised storage.’

Since 1983, Battery has been investing in technology and innovation worldwide. The firm partners with entrepreneurs and management teams across technology sectors, geographies and stages of a company’s life, from start-up and expansion financing, to growth equity and buyouts.

Copyright © 2009 NewNet

Established in 2006, Israel Cleantech Ventures is the first venture capital fund dedicated to providing value added growth capital to exception entrepreneurs building Israel’s energy, water and environmental technology leaders.

The fund has $75M under management and to date has invested in nine portfolio companies.

Jack Levy is Partner at Israel Cleantech Ventures. Previously, he held the position of Vice President at Register.com, following his role as a corporate attorney for New York firm Willkie Farr & Gallagher.

Why cleantech?

‘We felt in early 2006 that the time was right to enter this market. The growth dynamics of the different sectors were extremely powerful and could justify venture quality returns. Cleantech was a very under-invested sector in Israel. At the time, there was somewhere between $1.5-2bn venture capital available in Israel but none of it was focused on energy, water or waste so that made us believe it would be a great opportunity.’

Which areas do you participate in within cleantech?

‘We have a specific geographical focus on Israel and our expertise lies in combing the Israeli market for the best investment opportunities. In terms of sector focus, we look at cleantech rather broadly and have made investments, ranging from water to waste energy to solar. Presently, we are actively looking at areas such as biofuels and green IT.

I am personally focused on water technologies, biofuels and green chemistry. From my perspective there is a tremendous amount of deal-flow, innovation, history and large companies with over $1bn in export from Israel’s water sector. That certainly appealed to me as I was building up my network and my relationships.’

What type of investments do you like to make?

‘We are early-stage focused. We have made some seed investments, but the best profile of an investment for us is when there has been some capital that has gone into the company, whether it be from angel investors, government money or a seed-focused fund. We expect entrepreneurs to have already proven the concept, perhaps through a small-scale prototype.

The risks that we are taking, therefore, are scaling up the prototype as well as the commercial risks involved in building a company.’

Would you consider working outside of Israel?

‘We do have the ability to venture out of Israel geographically and we do look from time to time, but there is usually some Israeli connection to the deal. We want to know that we can contribute something unique to the company such that it makes sense that we are actively involved.’

Where do you see the best opportunities going forward?

‘We are very interested in balancing out our portfolio and are therefore actively pursuing new technologies in water and biofuels, as well as green IT.’

What challenges do you face?

‘Anyone who says that the financial downturn is not having an impact is gravely mistaken. At this point in time it is a challenging environment for anyone to be selling anything.

We are at a time when capital and credit are tight and our companies are staying as close to their customers as possible to ensure that they know who really wants to buy and when.

Having said that, the long-term trends for energy consumption and cleantech innovation will by no means disappear. Oil and commodity prices have declined, which has an impact on the price of alternatives because we need to be financially-competitive. However, population growth, urbanisation, water scarcity and global warming are the cleantech drivers that will refuse to go away. Only through innovation and technology will we be able to bridge our long term supply and demand imbalances in a sustainable manner. There is a need for cleaner energy worldwide and we continue to be very bullish over the long-term regarding the potential for technologies that can meet these needs. There is also definitely a lot of government support and indeed, political will, that will continue to drive stimulus packages for these sectors.

Is lack of experience a problem in this area?

‘We would love to see more experienced co-investors who have a specific focus area in cleantech becoming more active in the Israeli market. We are beginning to see that. There are a couple of cleantech-focused funds within our country and we are seeing more generalist firms start to look into this sector. We see a great deal of innovation from people trying innovations or technologies that failed to take off following the last energy crisis. We look to work with people who know what was tried last time and understand what went wrong, but have a vision to make it work for the future.’

What are the benefits of operating in this sector?

‘Our job is to bring exceptional returns to our investors. These are markets that are poised for rapid growth and rapid absorption of innovative products. One great benefit to operating in this area is that the pull from the market is so strong that large corporations will look at technologies at a very early stage. Entrepreneurs who think their products are too early to interest these strategic partners are mistaken because the big players want to get their hands on innovation very early on and start talking about ways to commercialise it.’

How do you source investment opportunities?

‘At this point in time we are the largest fund in Israel focused in this area and the first one to dedicate itself entirely to cleantech. We have an investment team of eight professionals as well as a strong brand, so we generate a lot of inbound dealflow. We have nine portfolio companies and receive a lot of referrals through them as well. We generate proprietary deal flow through our own network and we are very well plugged-in with the universities and other sources of innovation and to the entrepreneurial community. We are active in sponsoring conferences and fostering the cleantech community as well.

It is important to us that successful entrepreneurs look to make their next foray in this area.’

What makes you want to invest?

‘I believe you often look back at the long diligence process and realise that there were a factors that got you excited from the outset. First and foremost, you need to look at the entrepreneur and know that they have talent as well as knowledge and experience of their market. You need to know that you are backing someone who will be fully aligned with you and dedicated to the venture’s success, and who understands the direction they need to take and the customers they are targeting.

Of course, we also look for the strength of the innovation and a belief that it has a long-term sustainable competitive advantage as well as a strong business model that can drive rapid growth.’

How do you see cleantech evolving?

‘The one thing I would say about the market evolving is that slowly but surely you will see cleantech blend into industry as a whole. Alternative energy will grow to the extent that it will be well-integrated within the traditional energy companies. Things that may be viewed as innovative technologies now will become more and more standard. One of the things that excites us is seeing opportunities that are not necessarily renewables or water-related, but are process or efficiency improvements that work towards saving resources, and come from within different industries themselves.’

What role will the US take in the global shift towards clean energy and where will cleantech innovation come from?

‘In terms of size, the US market is the largest energy market and remains unrivalled. Over time, some of the Asian markets will become good contenders but the environment for commercialising innovation remains difficult in some of those locations.

In Europe we have seen leadership in these areas, solar started with Germany then followed closely by countries such as Spain and Italy.

From the Israel perspective, I believe our country will continue to be a rich source of innovation because we have a culture that promotes creativity and risk-taking. We have a legacy of water scarcity, a great deal of sun and no fossil fuels to speak of, so we have a long history of innovating in these areas.’

Copyright © 2009 newnet