 |
 |
||||||||
| Fall 2008 Newsletter | El Dorado Ventures website |  |
||||||||
|
10 Reasons Why We Should Increase Our Dependence On Foreign Oil By Sheeraz Haji | EDV Entrepreneur-in-Residence and It is clear that we need to take the world's energy and climate change concerns very seriously. We believe we have already entered a new carbon-constrained
era, and that this change represents a significant disruption for our global economy. While much attention (and investment) has been focused on how to shift to less carbon-intensive sources of power
(e.g. solar, wind, and geothermal), we believe there is an equally important opportunity to help businesses and consumers become more energy- and carbon-efficient.
What do we mean by energy efficiency opportunities? While there are several ways to drive efficiency throughout the economy, we are
particularly excited about the opportunity to create new products and services that help businesses and consumers collect information, analyze data, and make more informed
decisions. We believe attractive opportunities exist across the industrial, residential, commercial, and transportation sectors. Here are a few examples:
Business intelligence that improves energy efficiency in the data center - Jonathan Koomey of Lawrence Berkeley Labs has
estimated that about 1.2 percent of U.S. electricity is used by datacenters. Power use by datacenters more than doubled from 2000 to 2005, with annual consumption exceeding 59 billion kilowatts and
expenditures of more than $4 billion in 2005 (Source: The 451 Group). This growth creates an opportunity for software and services to help IT departments better understand their
real-time energy usage and help executives make optimization decisions. Some efficient IT initiatives have recently been launched by incumbents, for example power companies (e.g.
CenterPoint and PG&E), IT system providers (IBM, HP, VMware), and existing datacenter suppliers (Liebert, Powerware). A few startups (e.g. CSRware, Modium) are targeting this
space, but we believe this market is still in its infancy.
More efficient lighting - According to Professor Steven Denbaars of UCSB, lighting consumes 22 percent of all electricity produced in
the U.S. The Department of Energy (DOE) estimates that $98 billion in energy savings could be realized if solid state lighting achieves projected efficiency targets. EDV portfolio company
Bridgelux has developed advanced solid-state lighting products (LED chips and light engines) that offer superior quality, lower cost, extended
life, and enhanced efficiency—without compromising optical, thermal or electrical performance.
Enterprise carbon accounting - Consumer pressure, nonprofit advocacy, and the threat of regulation have driven many businesses
to make bold claims about reducing the carbon footprint of their operations, their products, or their supply chains. However, existing software and services for measuring a company's carbon footprint are
rudimentary at best. How can a business reduce what it can't measure? The pressures for businesses to understand their footprint in a comprehensive and dynamic way will only increase over
the next few years as a new administration considers a national cap-and-trade system to regulate carbon. A couple of new ventures (Carbonetworks, EcoSynergy) have started working on this
problem, but we think enterprise carbon accounting represents an exciting new market that has yet to pick its winners.
Smart metering in the home and at the office - We're constantly reminded to find ways to cut our energy use, but that's hard to do
when you can't tell how much energy you're using when you, say, leave the lights on in the office or the DVD player on all night. We need easy-to-use control panels, akin to your home alarm system panel,
that provide a detailed breakdown on how much power we are using at any given time. Sounds easy, doesn't it? But making this work across millions of households (or throughout the commercial
sector) is far from trivial. We believe smart metering in the home and at the office is inevitable, and we can't wait to see who wins this race.
Developing a smart grid - Today's alternating current power grid was created in 1896 and is shockingly inefficient. Information flows
one-way—from the users to the utilities. The Global Environmental Fund estimates that an upgraded grid would allow efficiency initiatives (e.g. enabling demand side management to reduce power
consumption during peak hours) to substitute for new generation at one-third the cost of a new power plant. We believe there is a tremendous opportunity for startups to use lessons from the evolution of
the Internet to improve the transmission, distribution, and use of electricity across the grid. Specifically, we believe a "smart grid" has three important technology components: (1) intelligent monitoring
devices (including advanced metering devices described above) (2) two-way communications systems and (3) control and routing solutions to allow computers to make basic routing decisions across
the grid. Startups entering this space will encounter a number of barriers, including: (1) competition from established technology players (e.g. IBM) and well-funded new entrants (e.g. Silver
Spring) (2) a lack of established standards and (3) dependence on utilities to deploy solutions. However, smart entrepreneurs who persevere will be richly rewarded. The Brattle Group estimates
that $1 trillion will be invested in North American transmission and distribution from 2008 to 2030. This should provide ample room for nimble entrepreneurs to build attractive businesses.
As we shift from a world where we thought of fossil fuels as an infinite resource to a carbon-constrained economy, we will encounter tremendous
opportunities for energy efficiency innovations. Are you working on any of these (or better) ideas? If so, we would love to hear from you. In the meantime, please remember to switch off the
lights when you leave!
El Dorado Ventures (EDV) is a leading entrepreneur-focused, early-stage venture capital firm with over two decades of success. Entrepreneurs see EDV as a trusted investment partner who shares
their vision and helps them succeed by providing ongoing strategic guidance and access to a wealth of industry contacts. With $750 million in capital under management, the firm invests in disruptive
technologies and business models in emerging and high-growth markets, across a broad range of sectors including software, technology-enabled services, communications and emerging technology.
El Dorado's early-stage investments have included Compellent Technologies, Cyras Systems, EarthLink, Efficient Networks, Novellus and NuSpeed Internet Systems. Numerous EDV portfolio companies
have gone public or been acquired by major technology companies including AT&T, Ciena, Cisco Systems, nVidia, Siemens, Texas Instruments and Yahoo.
www.eldorado.com
|
 |
El Dorado Ventures seeks to invest in a select number of companies pursuing opportunities in the following broad categories:
EDV Invests in Grain Communications Group Please Note: This e-mail newsletter was sent to a list compiled from our internal contact database.
If you would like to be removed from our database, you may opt-out by clicking here. | |||||||
Reason 1: We really like SUVs
We can already hear the skeptics groaning that energy efficiency might not represent
a large enough market opportunity. We think it is significant today and will be massive in five years. According to McKinsey & Company, $170 billion a year invested in efforts to boost energy
efficiency could cut the projected growth of energy demand in half. That's an annual energy savings of $900 billion by 2020.
