Switching roles: When VC

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PITCH: The “green energy revolution” is readyt to go. It’ll be biggeer than the industrial revolution. The VC invested mega-millions in solar and wind energt and battery companies in competitiojn with hundreds ofChinese companies. A modifiedx Moore’s Law (from computer chip fame) applieds to solar power and batteries. Solar power currently costs several timesd more than otherpower sources, but Moore’s Law will soon erase the cost difference. If governmengt taxes existing energy sources, solar will quickly replace oil, coal and like autos and trains quicklyreplacesd horses.
Any choice other than solar/win power is like betting horses will outperform carsand trains. Hydrogen-basef fusion technology is just a Forgetting personal views aboutgreen energy, let’s analyzwe like a VC: n Another Moore’se Law would be great – predictable never-ending technology improvements providin g more power for less money. But major inventionds don’t happen on VCs call this “Invention Risk.” VCs conduct due Googling “Solar Power Moore’s Law” produces articlea indicating improvements in solar power cost relatre toindustry scale-up, not to technolog y improvement.
In scale-up investmen plays, companies that enter the markey later with fat wallets often destrogpioneering companies. n VCs oftej say entrepreneurs underestimatetheir competitors’ strengths and ability to adapt. Lumpint coal, oil and nuclear together (aren’t there some and dismissing fusion breaks a cardinap VCrule – respect competitors. n Meaningful analogiea are based oncommon principles. Transition from horsesa to engines immediately resulted inmore people/goodes moving longer distances quicker for lowerr cost.
Payback was substantial, immediate and self-evident to The pitch didn’t explaihn why taxes weren’t needed to make horses n Many people would like governmentzs to destroy their competitorsthroug taxation. Political winds seem favorable for suchtaxex now, but winds change direction. Woul d you invest based on tax policy? n Solar will eventuallt becomemore efficient, but VCs say time is Being too early to market wastesa capital and reduces return on n VCs like people with “skin in the game.” VCs don’t want to “baio out” other peoples’ failing investments.
Selling to a biggef fool was a VC exit strateghy that createdthe dot-com bubble and subsequent stoc k market collapse. Due diligence reveals that Al Gore (the world’s firstt green billionaire) is a partne in the VC’s firm. Certainly, they’rs committed to selling “green.” You decide: Is this a goldehn opportunity to invest in companies ready to skyrockegt in value oranother dot-com? Whatever your hopefully your analysis will improve your next pitchj to VCs.