While cleantech investing is a hot topic today, Foundation Capital has been focused on the sector for about six years (the firm is a pioneer in the space). Last year, one of the firm's investments -- EnerNOC (NASDAQ: ENOC) – went public and now garners a market cap of $800 million.
I had a chance to talk to Steve Vassallo, a principal for the cleantech practice at Foundation Capital. Vassallo has worked with companies like Cisco (NASDAQ: CSCO) and Nike (NYSE: NKE). He even holds 19 patents.
So, what is on his radar?
Capital Light: Vassallo doesn't like deals that require huge amounts of capital, such as solar and bio-fuels. "We look for ways to use software and information technology (IT) to bring about more efficiencies," he said.
An example is Silver Spring Networks. The company has fixed two-way wireless solutions to help utilities improve meter data management.
Strong Business Model: "I look for companies that create business models where everyone wins," said Vassallo. "I think a great example is EnerNOC, which uses the Internet to connect utilities and customers to help reduce power usage. The utilities can better deal with peak usage and customers can realize energy savings."
Be Wary of Solar: No doubt, solar companies are red hot, as seen with First Solar (NASDAQ: FSLR), SunPower (NASDAQ: SPWR) and and JA Solar Holdings (NASDAQ: JASO). "It helps that oil is close to $100 a barrel," said Vassallo. "But costs for solar are not coming off, and the industry relies on subsidies."
Tom Taulli is the author of various books, including The Complete M&A Handbook
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