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Green, clean, and lucrative

More than 18 firms from around the world presented their business plans at the fair. European Energey Venture Fair

The whining buzz of your neighbour’s Piaggia Vespa at three in the morning may be a thing of the past if new battery powered, zero emission scooters from Vectrix hit the European market soon.

Looking like a personal rocket, the electric scooters are quieter and can run for 110 km of drive time at 40 km per hour before needing to be recharged.

Innovations include a brushless motor and advanced, lightweight batteries.

The US company is just one of eighteen firms selected by a jury of experts to present at the second annual European Energy Venture Fair in Zurich, founded by SAM Private Equity, a Swiss venture capital firm.

It has led investments in emerging technology firms such as Enginion, Zoxy, and Ormecon in the past year.

According to the event organisers, more than 400 firms from around the world applied and 18 eventually presented their business plans in an eight-minute “pitch” followed by “networking sessions”, also known as a coffee breaks and lunch, where they could rub elbows and exchange business cards with sharp-suited investors.

Investor interest climbs

The number of investors targeting the sector appears to be increasing rapidly. Sixty more people than last year signed up, as representatives of the corporate venture arms of large European and Canadian utilities, oil and gas companies, and chemical companies, as well as venture capitalists turned out in force.

Large buyout fund managers, such as Doughty Hanson and Apax Partners, are attracted by the “significant deal flow” in the sector.

Larger transactions, such as the privatisation of municipal utilities and corporate spinoffs of non-core activities are also attractive, says Torsten Krumm, Partner, Apax Partners, who spoke at the event.

Illustrative of the size of transaction is the CVC Capital Partners acquisition of Germany-based Viterra Energy Services for SFr1332 million ($994 million). This is just one of a growing number, according to Felix Goedhart, CEO of Equitrust AG who also spoke.

Smaller venture firms are attracted by the opportunity to participate in the commercialisation of technologies emerging from the labs of Rolls Royce, Volvo, Volkswagen, and ABB to name just a few examples, in addition to university spinoffs.

If successful, their investments in tiny startup firms could turn into a bonanza, generating three to 30 times money when the firms reach a later stage and are acquired or go public on the stock market.

Making dollars not just sense

The big oil companies and insurance firms have often been accused of just paying lip service to green tech, but the fact is that these investors are paying cash and increasing investments.

Registration for the event alone is SFr1500, not to mention the travel costs of flying executives from Paris, Stockholm, Quebec City, and New York.

The fee gets them a glass or three of expensive Swiss wines and tasty tapas at SwissRe’s Center for Global Dialogue on the shores of the Lake of Zurich, a building whose deluxe-minimalist design makes Mies Van Der Rohe look ornate, but more importantly it gets them access to attractive investment opportunities.

The trend is clear as academics, entrepreneurs, and venture capitalists present their particular angle on sustainable energy at the event. The demand for alternative and efficient energy solutions is growing.

The market drivers vary depending on the region. In North America it’s the need to upgrade and replace crumbling legacy systems.

If the US utilities replaced their old equipment installed in the fifties and sixties with state of the art generators, there would be an immediate and dramatic reduction of emissions of greater than 30% percent, according to Horst E Vollmer, Head of Technology and Innovation at Siemens AG.

In Europe and Japan, governments are precipitating demand. They want to reduce greenhouse gas emissions in accordance with the Kyoto Protocol. This creates an immediate market for alternative and renewable energy technologies in the tens of billions of Euros.

“The consensus regarding the use of renewable energies and sustainability will cause major changes in the energy mix over time and create new industry sub sectors,” according to Goedhart.

Greater liberalisation in the 120-year-old electricity markets is also a driver.

Founded for profit

Companies in the alternative energy sector contrast sharply with the types of internet and software firms that mushroomed here in the late nineties.

They are not founded to be flipped to investors without ever having made a franc of revenue.

Their valuations are related realistically to their profits and many own a patented or hard to copy technology, such as ClimateWell, a firm that makes air cooling and heating system that can run on solar or thermal power.

It is the result of 20 years of research by Stockholm-based ClimateWell’s founders.

A British engineering company has developed a new way to capture energy from ocean tides and transport it to the grid, while a Swiss firm claims to use nanotechnology in its highly-efficient air conditioners.

In addition, two Swiss firms, Solarinox and GreatCell Solar, say they are trying to commercialise breakthroughs made by Professor Grätzel of the Swiss Federal Institute of Technology. He has licensed his patents to a number of solar cell manufacturers.

Soon to be profitable firms include Trithor, a German firm that sells superconducting wires.

It says it has moved into the number one spot in its market in less than a year. And then there is Zephyros, a Dutch firm that designs and assembles innovative wind turbines with few moving parts.

by Valerie Thompson

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR