Benjamin Kuo’s Blog

More on how big clean technology has gotten in Southern California: Ernst & Young has run the numbers, and determined that Southern California made up $363.5M in a record setting $1.6B invested in clean technology firms in Q3, ahead of Silicon Valley for the quarter’s clean technology activity.

Much of this was driven by later stage investments–big investments like $148M in SolarReserve, in Santa Monica–but it’s interesting to see that Southern California is holding its own in terms of development and commercialization of green technology. The ultimate test, of course, is how much of this technology and development is successful in the market (just look at the recent woes of much-hyped Tesla Motors..), but it’s good to see that our deep technology base (cleantech take a lot more science/engineering than 99.9% of your Internet startups) is helping the region out significantly here.

People talk a lot how an area creates an environment conducive to startups and high tech entrepreneurship. One huge factor in “startup creation” here is the presence of at least two, highly ranked MBA programs in Los Angeles. UCLA Anderson is ranked by U.S. News & World Report at #11, and USC Marshall is ranked by U.S. News & World Report at #21–and although not as prominent in terms of reputation as places like Harvard, Stanford, or Wharton–I run across an immense number of entrepreneurs others who went to either school.

We just posted an interview with a company (Scripped) with a little bit of both USC and UCLA — a USC film MFA with a UCLA Anderson MBA, but they are just the latest of many, many startups we encounter here which are driven by ambitious, energetic students coming out of the local universities, and in particular, their MBA programs.

As much as people debate how to get technology out of universities, it’s clear that their presence–and particularly their MBA programs–injects lots of “raw material” into the ecosystem here in the area of new ideas and entrepreneurs.

Anyone remember that complaint about “there aren’t any experienced executives available here in the job market?”

Well — thanks in no small part do the market downturn — it seems to me that anyone who can’t find a good, experienced (ie 2+ success) executive willing to join their startup now isn’t looking hard enough.

In the past month or so, I’ve met with many very experienced, qualified, and well regarded executives who have been looking for a great company to join. Whereas a year ago I had many venture firms and companies talking about how hard it was to find folks at the Director, VP, or even CEO level to run their companies, I think the tide has turned quite significantly.

One of the major things I’ve noticed, is that there are lots of folks “back in the market,” so to speak–I’ve spoken with number of executives (with some great successes) under their belt, who had taken some time off, were dabbling in angel investing, traveling, etc. — but who are now thinking they’d rather be involved in something. Sometimes, it’s because their stock portfolios are down, but often more than anything they’re looking for the challenge of a company to run. I also think this is somewhat due to a smaller number of “new” companies being funded, which is constraining the demand side–particularly at Tier 1 funded startup firms.

So, the upside: if you’ve got the money or funding, those experienced execs you’ve been looking for seem to be out there…

I’ve noticed a few news articles, blog posts, etc. recently commenting on how “such-and-such company has just gotten venture capital, despite the recent financial crisis/crash/etc.” and how the funding “must be a great thing to get money despite the environment.”

First of all, yes, venture funding will continue — it continued, albeit at a lower level, across the dot com bust, because there are always new companies out there looking for capital, new technology, and investors looking for the “next best thing.”

However, any use of venture funding numbers being announced today (or, in the next month) as examples of venture capital funding NOT being affected by the financial downturn, are basing their information on old data.

The reason why?

1. Venture funding announcements do not necessarily, and often do not, reflect actual funding dates. Many of the fundings are released weeks, and even months (6+) from when they actually closed.
2. Any venture rounds closing now, have most likely been in progress for many months before they closed. i.e. folks may have kicked off fundraising on rounds being announced now six months (or more) ago. Their announcements, or lack of announcements, are a better reflection on the venture environment a few months ago, last month, but not today.
3. Given the financial crisis has only been showing itself in technology this month (i.e., October 10th or thereabouts for the Sequoia RIP Good Times presentation), any rounds expected to close October 31st were well on their way to close and most likely were far enough along to not make a major impact on deals.

Unfortunately, venture funding (as we follow this really closely) has a built-in information delay loop. It’s not an efficient market, in the sense of Wall Street, because information is not available to everyone at the same time, and that tends to distort where things actually are…

I don’t know about you, but either Gmail thinks I can read a lot more Hindi (?) (see embedded ad below) than I thought I could, or someone has some strange ad targeting parameters:

ps. I’m clearly NOT at zero inbox.

I had the chance to moderate a panel on sustainable technology Wednesday at Los Angeles Technology Week, and had a great opportunity to ask questions and hear from some experts in the area. On the panel was Rao Surampudi of JPL — who designed the batteries and power systems for the Mars Rover, Gregg Ander — a green building expert from Southern California Edison, Michael Bissonette, GM of Aerovironment’s Efficient Energy Systems group; John Howard, of Idealab startup Distributed World Power; and Deep Patel, of GoGreenSolar.com, an online retailer for solar and wind power. The one benefit of being moderator on these panels is you get to ask the questions you want to hear the answers too, and you get to hear from experts who are far more experienced that you are on topics such as clean energy.

Among the many great insights from the panelists — as well as from other panels at the conference — was that much of getting the benefit of sustainable energy and clean energy is just putting it into action. I asked the panelists if there were any areas of clean technology which could make a huge difference, and they all said that the technology is now out there, available, and just needs to be put into the market. They also all agreed that one of the most exciting areas — in both the energy industry as a whole, as well as for Southern California, is in the auto industry.

Some snapshots from the conference:

Tesla P1 Roadster — the very first production line Tesla electric car, parked at the conference.

Another view of the Tesla. This one is actually Elon Musk’s personal car.

The Aptera Typ-1. Steve Fambro, the car’s designer and CTO of Aptera, is on the left.

Steve Fambro, Aptera Motors

Chevy Equinox Fuel Cell vehicle. Here’s a solution to your high gas prices: If you’re within range of the (very few) hydrogen fueling centers for this car (ie, Santa Monica, Burbank, etc.) Chevy is loaning out this and other Equinox Fuel Cell vehicles for free (including hydrogen), for two months at a time.

It’s always been fascinating to me on how technology clusters — groups of companies in a related industry — form. Talking with companies, you soon learn that there is usually a clear chain of successful companies that have been spawned out of other companies, forming a “genealogy” of how an industry is created.

Recently, I ran into Cliff Hannel, an angel investor and experienced executive who has seen some successes at local firms here, who has created his own personal project to map out the genealogy of companies along the 101 Corridor (San Fernando Valley to Santa Barbara).  He shows how much of the network/testing industry along the corridor descended from Litton (going on to form such companies as Micom, Netcom Systems, ACT Networks, Fibermux, Xylan, Occam Networks, Ixia, etc.) It’s something most people with reasonable interest in the industry soon realize, but Cliff’s mapped it out nicely on his pages.

It would be interesting to do this for any number of the different industries here in Southern California–I’m sure you’d see that one or two major, successful firms in an area can spawn dozens of other firms and entire industries.

I’m always interested in how much more focus Silicon Valley companies get in the press–and mindshare–than companies located in Southern California, even among people here in the region.

I had the opportunity to talk to an MBA class at USC last night, and talking to the students I was surprised to find that most of the students weren’t aware of how much clean technology activity there is in Southern California. Asked to name an electric car company, most people mention Tesla Motors, the Silicon Valley darling, but aren’t aware of the numerous Southern California electric car companies out there with venture funding, such as Fisker Automotive, Venture Vehicles, Aptera, Phoenix Motorcars, and Miles Electrical Vehicles. You mention solar, and people don’t realize there’s quite a bit of activity here–even though you have firms like eSolar (Google invested $130M in them, btw), Energy Innovations, and Soliant Energy.

Why is this? Well, one is probably because there’s very little coverage in the technology press and blog world (mostly based in Silicon Valley) on Southern California firms; because local newspapers — when they cover technology at all — tend to carry Silicon Valley centric pieces from the wires instead of doing their own local research; and also because Southern California firms tend to be more focused on their businesses and less on developing technology celebrities. Is this bad? Perhaps, if the lack of mindshare dampens investments in the region, or gives an advantage in getting the word out about your products to the greater world. But perhaps not, since the limelight can sometimes be negative (just look at the feeding frenzy over layoffs at Silicon Valley startups over the last week or so…).

For anyone here in Southern California who follows technology and Hollywood, there’s an awareness that technology is drastically changing the way that Hollywood is operating. It’s upset distribution, production, and many other parts of the business in a major way, and people haven’t yet figured out how or when it will settle out. Jonathan Handel is an entertainment and technology attorney at TroyGould in Los Angeles, and regularly blogs at Digital Media Law and the Huffington Post, and always offers keen insight into the intersection of the two industries.

In Hollywood Under Siege–just posted to our Insights & Opinions section today– Jonathan very effectively spells out the issues facing Hollywood and the content business today. It’s well worth a read.

California’s economy is at war with itself. Like the Civil War almost 150 years ago, the factions are split geographically, but this time, the two sides are Northern California and Southern California—more particularly, Silicon Valley and Los Angeles. This battle turns on whether it’s true that “content is king,” as many people believe, or whether content is becoming a mere commoner while the technologies that distribute it become ever more valuable. The outcome of this struggle may determine the future of the entertainment industry.

PricewaterhouseCoopers and the National Venture Capital Association (NVCA) released their quarterly MoneyTree data over the weekend, totaling up $751M in Southern California deals. Taking a closer look at the numbers, LA led the region with $385.65M in deals, but Orange County also had a strong showing with $186M in deals. San Diego slipped somewhat in the amount of capital invested during the quarter, to $178.4M. Interestingly enough, San Diego — which led Q2 investments — slipped significantly in deal amounts this quarter.

Top ten deals for Los Angeles:

1. SolarReserve, $140M
2. Mail.com, $32.4M
3. Microfabrica, $22.6M
4. SpaceX, $20.4M
5. VivoMetrics, $19.9M
6. Perfect Market, $15.6M
7. NanoH2O, $15M
8. MyShape, $12M
9. Fonality, $12M
10. Red Mango, $12M

In Orange County – land of the stealth deals this quarter — the top deals went to:

1. Fisker Automotive, $65M
2. Glaukos, $35M
3. GluMetrics, $20M
4. Aktino, $14.2M
5. Aristos Logic, $13.4M
6. Symwave, $10.1M
7. Seventh Shield, $8.2M
8. RF Nano, $8M
9. NeoMend, $6.3M
10. Ivantis, $4.5M

Finally, San Diego’s top deals:

1. Sapphire Energy, $35M
2. Peregrine Semiconductor, $30M
3. PowerGenix, $30M
4. Verimatrix, $21M
5. FrameMax, $10.1M
6. Sequoia Communications, $10M
7. CoDa Therapeutics, $8M
8. Access Scientific, $5.5M
9. ISE Corporation, $5.5M
10. AndroScience Corporation, $4M