Cleantech 2.0: pragmatic and capital-efficient: Aravaipa Ventures leads a new version of cleantech investing.

• Author: Lewis, David
• Position: SPECIAL SECTION

WHILE THE POPULAR NEOIA AND ONE PRESIDENTIAL candidate actively berate cleantech, a Colorado fund remains strongly confident in a strong future for cleantech. Aravaipa Ventures' Founder and Managing Director Robert Fenwick-Smith calmly states, "Like all young industries, cleantech is growing from an idealistic spendthrift youth to a pragmatic and capital constrained adulthood. And for the investors who bought into the original hype, these are painful days."

Fenwick-Smith argues. "The first phase of cleantech investing has been mainly characterized by large coastal venture capital firms taking big bets on game-changing billion-dollar technologies. This is understandable as most of these VCs have TT backgrounds where game-changing bets provided superb returns, and these films have such huge funds hundreds of millions or billions that they can only afford to make large investments."

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Since its inception in 2008. Aravaipa Ventures has taken a very different approach: to build profitable and capital-efficient cleantech companies. Or put otherwise. "Aravaipa looks for singles, doubles or triples whereas traditional VCs look for home runs. These two very different approaches could yield similar returns for a fund: traditional VCs having very few large winners while Arayaipa has multiple smaller successes."

This more pragmatic approach does include backing technologies designed to have a tremendous impact on the world. Fenwick-Smith highlights Lightning Hybrids LLC., one of the Aravaipa portfolio companies: "Lightning Hybrids' hydraulic hybrid system reduces gas consumption or light commercial fleets by 35 percent a much bigger impact on U.S. gas consumption than Tesla and Fisker combined! Obviously not half as sexy--until you understand that Light ring Hybrids will have that impact with less than $10 million invested versus the billion going to each EV company." Aravaipa Ventures calls this pragmatic and capital-efficient investing "Cleantech 2.0."

Another example of Cleantech 2.0 from the Aravaipa portfolio company is RavenBrick LLC. Where its Smart window competitors Sage and Soladigm have invested hundreds of millions of VC dollars to set up manufacturing, RavenBrick will do the same, right...