 Hopefully, we'll be able to have a lively discussion to match the lunch presentation that we just have. Maybe not so much debate, but we'll cover some interesting topics. So I'm pleasure. My name is Michael Bennett. I'm with the Stanford Global Project Center. It's my pleasure to be joined by Ilan Gur from Cyclotron Ventures, Gabriel Croft from Prelude Ventures, and Mary Ann Wu from General Electric Ventures. We're here to talk about investing in clean energy technologies. And so how I'd like to kind of format, we started a few minutes late, so we got about an hour to cover a pretty wide variety of topics this afternoon. But what I'd like to do is maybe give each of the panelists to start an opportunity to kind of introduce their organization, how they invest in the type of new ventures that they invest in, and kind of where in the technology spectrum that they target. And then I have a few questions that I'd like to kind of send down the line to start the conversation. And then we'll also open it up for questions from the audience. So if you do have questions, I think we have some volunteers with microphones, if you can just raise your hand, and we'll kind of take it from there. So maybe we can start with Ilan if you want to introduce your organization. Sure. Can everyone hear me? This is Mike Ong. Hello. I think you need to point here. How about now? Yeah. All right. Wonderful. So my name is Ilan Kerr. I'm the director of a program called Cyclotron Road. We are not a venture group. We are a very unique accelerator, incubator program focused exclusively on providing a home that empowers and enables hard technology entrepreneurs and innovators to get started in building transformative energy companies based on technology. The framing, so what we do at Cyclotron Road is we provide some seed capital to allow innovators to go all in on their projects. We give them access to one of the world's premier R&D laboratories. We host our program at Lawrence Berkeley National Lab, about a billion dollar a year research laboratory. So we give them access to the facilities and the expertise there. And then we provide a mentored experience with both education and mentorship around hard tech entrepreneurship as well as a network and an ecosystem of folks who have experience and interest in supporting hard materials, chemistry, and manufacturing technologies. The basic motivation around what we're doing is pretty straightforward and I think we'll resonate with folks here in Silicon Valley. We love Silicon Valley because basically we can create an enormous amount of impact and wealth with innovation. It turns out if you're an innovator whose innovation is based on a software or digital technology there aren't a lot of barriers to getting started. You have your idea, you can go prototype pretty easily with a small group of people without a lot of capital. If you get some early traction there is a very strong ecosystem and a very clear model on how to scale those businesses. You can get that investment and build that to scale. We're around because if you're the type of entrepreneur or innovator who has again a chemistry and materials innovation no matter how good that idea is the barrier to getting started is much higher, largely because you need a different set of expertise and you need some sophisticated facilities and infrastructure to get started. You need a lab. So in that case it might instead of raising $50 or $100,000 as a seed you probably need closer to $1 million or more to go build your research tools. That will probably take you at least a year to get someone to commit that much money for a very early stage project if you even can. You might not and walk away. If you can a year in you're now setting up a lab it's probably a year and a half before you're actually getting any learning cycles. That might be one or one and a half percent of your life before you've even gotten started. Once you get that investment or that early ability to get started you have the issue that most of the resources out there you go to any blog on entrepreneurship tend to be catered to software and not necessarily physical science based technologies. So the educational system, the network of supporters and certainly the network of financiers and I think that'll be the topic of this panel is much more fragmented and we're trying to bring all of that together. Hey there. Thanks for having me on the panel. My name is Gabriel Kra and I work at Prelude Ventures. Prelude is a venture firm and we invest exclusively in companies that when successful will reduce net CO2 in the atmosphere or CO2 equivalents. That is definitely for us a mission driven thing. We talk about that, we believe it, we support the community in lots of ways. But as a venture firm for us that's just the sandbox that we play in. That's where we invest. So if you come to us a lot of things we'll sort of say this is carbon reducing, it's solar, it's wind, it's storage and we'll do it. Other things we'll have to have a debate or a thought process and we'll say does this fit in our mandate because we want to be able to define that pretty broadly and so we include things that some people see as obvious and others don't. We can be happy to discuss that at some other point. But then once you've sort of passed through those gate posts then it becomes a venture decision. Venture has not necessarily been, the most successful industry for venture has not been energy tech and hard science tech in this sector for some fairly good reasons and also because some mistakes were made in applying venture models to these things, both things. But one of the key things where we are different from a traditional venture firm is we have an evergreen fund and we have a flexible mandate on how we can invest into our companies. So evergreen is important. If we like an opportunity and we like a group of entrepreneurs that means that we can invest three, four, five years into our fund life on something that might be a 10 or 12 or 15 year time horizon company. That's important in many of our sectors and industries. The flexibility of our mandate also allows us to invest both very early seed stage investments, a couple of hundred thousand dollars to some really good entrepreneurs with a great idea or an interesting idea. Maybe it's not a great idea, but also to do tens of millions of dollars into the same company later in its life cycle. So if we go early, it's because we want to help a team figure something out and if it works wonderful and if we'll continue to invest and if it doesn't work, hopefully they'll move on to something that will work in the future. So we will invest across the life cycle of the companies that we invested and then sort of how we invest once it's passed through that gate post, we really want to see, sure we can in some cases in software related things and service and some data driven companies, you could see a pretty well defined, well trod pathway up to liquidity and some time horizon. Otherwise though, what we really want to see is what is this money going to do, what risk is it going to take out, what problem is it going to prove is no longer a problem, what market risk or market uncertainty is it going to validate and we try to say, okay, we can do this equity investment to get you to this next gate post and I think the gate posts of value creation are different in these industries a lot of times than they are in traditional IT related ventures and then I could go on for way too long, so I'll say one last thing about how we invest, we're really cognizant that this is very hard, all venture, all new venture creation is hard, there are some places where this is even more difficult than a software IT driven venture and so we really do look really hard for teams who, it's an art, not a science, but for teams who we think are not going to stop when they fail, when they get their first setback or their second or their third, they're going to keep going for it and keep trying to figure out how to solve tough market regulatory technical problems within the confines of what they're trying to do. So I'm Marianne Wu, I'll start by saying I'm a Stanford alum, so delighted to be back on campus and thanks for having me. I lead the energy and intelligent environments investing team at GE Ventures. I'll come back to what that means in a second. GE, I think most of you probably know is a large diversified industrial. In the energy space, I think we're quite unique, we have businesses across a pretty broad spectrum of the energy market, including oil and gas, and then really all aspects of the electricity value chain. So we have traditional centralized generation, we have large renewable business, we have a significant grid business, and late last year we also launched a business going behind the meter into commercial and industrial customers. So very unusual, I think in the breadth of that platform. From a Ventures perspective, we invest for, we invest like a typical corporate investor, we invest for strategic and financial return. In many ways, I think that's similar to what you just said, Gabriel, that there has to be some strategic benefit that acts as a guidepost in terms of whether it fits into the investment lens or not. And that can be a very close and tangible, like we think that there is already, or we think there is a strong commercial engagement that can occur with our business units, and that can be about broadening our solution breadth, increasing time to market, or something fairly tangible like that, or it can be much more abstract and nebulous in a sense that the company is developing technology or pioneering in a market that we think is really interesting as a market that we might want to participate in downstream and just want to learn about. Once we kind of understand the strategic fit, it does go back to classic financial investing. We are measured on financial returns. It is not the primary purpose, certainly, of the venture's business in the sense that GE has many ways to make money, and venture investing would not be a primary priority for the company at that level. But GE is a very hard-nosed business, and if you're not making money as a division, then you don't get to survive. And so that financial return certainly is an important part of our charter as well. We do, unlike a lot of venture firms, we do also engage very deeply, and I know you're going to come back to this later, very deeply with the businesses. And so we have worked quite closely with them, and this is a relatively recent phenomenon, but we work quite closely with them on how they could disrupt themselves. And new business models and new technologies, and a lot of that's informed by what we're seeing outside, and then that disrupting of themselves can be, now we do that in partnership with third-party companies, that can be, as we did last year, launching of a new business inside of GE. We call it a startup, but it's a billion-dollar startup, and this is current that I was referring to, the current powered by GE, which is a behind-the-meter business, and that was something we felt we weren't doing in a concerted way inside of GE. There was a new opportunity, and that ventures had a very strong arm, a hand in creating that new platform. So we work quite closely with the business units in terms of strategic direction. From an investment perspective, you know, we are fairly broad. We can play across the spectrum, so we do early stage, series A, and sometimes do seed, although it's certainly not the main, and we have gone very late stage as well. In the main, we are series B, C-type investors, so if you translate that through, it means that there is some kind of product, that there is maybe early commercial revenue as a stage that we like to, we typically would enter at. But again, the spectrum can be very large. You know, this panel is certainly focused on energy, but just maybe quickly, we do, as an investment practice, also do investment healthcare, and a number of things around advanced manufacturing and supply chain and logistics. Great. Well, so I had a few questions or topics to maybe throw down the line to kind of get the conversation started before we kind of turn it over to the audience. So my research program at Stanford, so at the Global Project Center, we broadly speaking conduct research on how institutional capital can get to kind of strategic assets and infrastructure in more aligned ways. And so that's kind of a broad spectrum, but by that, I mean kind of the you know, hundred trillion dollars of institutional capital that exists in public pension funds, private pension funds, insurance companies, endowments, like the one across the street, and of how that capital source can get to infrastructure assets and as that applies to energy in a lot of cases, how that institutional capital can get around technology risk. And so one kind of observation that I wanted to make and kind of a trend as we kind of lay out the spectrum of energy technology risk and investing as it exists today is that that hundred trillion dollars for a little while, a small portion of it was getting into technology risk in that about a decade ago or so, there was a lot of closed-end venture capital funds were raising capital from our public pensions and other institutional investors and they had kind of clean tech investing programs and that they made their foray. And I think now just as a anecdotal observation, and you can correct me if I'm wrong, some of that capital is now kind of withdrawn from the market and as an observation, I think as we kind of span really the technology development spectrum here with the panel today, there are no closed-end venture capital funds, you know, on the panel today. And so I you know I think just kind of going down the line I you know it'd be great for me to hear and I'm sure it'd be great for the audience to hear kind of how the energy investment and energy tech investment technology, how that how that spectrum has kind of evolved over the last decade and will there be a will there be a an arm of of San Till Road or a year more traditional venture capital funds being back in the energy space or did it really ever leave and maybe we could just start from one that if you have any thoughts on that topic more broadly. Well what came to mind for me at Cyclotron Road we focused at the very very very beginning of this process we're you know super early the we run a competition every year and bring in what we think are the best kind of hard energy technology innovators from across the country and beyond in some cases largely because they don't have a way to get started with these projects almost proto companies right. There's no question in our mind that when you think about what it takes I think everyone on the panel would agree there's an enormous opportunity and a need to disrupt and transform the energy infrastructure system in this country beyond right when you think about how to go do that there's no question in our mind that most of the issues and the risk and the hard part of that is way downstream right and so some people would say well why even bother ceding these things if you can't solve the downstream and and the way we look at it is I think we're still very early in our learning cycle on how to move technology from an idea into a widespread market impact I think Gabriel you know the word he used which was you know we went through an experimental cycle here in the valley where I think the traditional venture scaling model for companies was applied and I think many would argue misapplied to a lot of very hard energy technology companies and ideas that were at a very early stage and the way I like to think about this you know it's like turn road we have sort of a fundamental belief which is if you get the best innovators in the world and you give them a platform that gives them the resources they need to create value with technology and you surround them with you know a network and mentorship and you give them some time those people will create value with technology they'll have a chance to create IP create knowledge both about the science and the technology risk but also about the markets understand you know build a team there is value in all of that we tend to think that there's a there's a full spectrum in terms of how any one technology might move to market and how that value might be brought to market might be extracted by the marketplace if you think of that large spectrum traditional venture capital as a financing model is one very very narrow slice of the spectrum and so I like to say that you know 10 over the last 10 to 15 years we crammed all of the early stage technology innovators and innovations into this narrow slice model and I'd argue that most likely if with the benefit of hindsight probably only maybe five percent of the things that we seeded with venture in hard energy technology were appropriate for that financing model so what we try and think about and I think what you see happening in the financial landscape right now is to say if there was a broader opportunity set in terms of how we create value let's start to explore financial structures that can support and bring value across that spectrum and I do still think there are great opportunities for traditional venture to be applied to energy technologies even some of the hardest energy technologies but there are certain ingredients you need you need some very strong premium first markets that can get you a foothold and scale and go beyond that but there are these other opportunities and we think a lot about corporations right if the risk is downstream it's balance sheet risk it's execution risk it's distribution channel risks those are things that big corporations have right so there's there should be a marrying there that can happen sometimes the risk is that the institutional capital cycle doesn't have the time horizon doesn't have the right aligned incentives we have new financial vehicles I feel like we've sort of gone straight into the middle of this and that we maybe lost a little bit of background so first of all I feel like we have already convolved energy investing with hard science investing and I don't think they're the same thing right absolutely I think they have a strong correlation in the sense that if you have you know a fundamental battery breakthrough a solar breakthrough a nuclear break breakthrough that's definitely part of energy investing but a lot of energy investing doesn't have to be hard science and so the mix of the two I think is where sometimes we get the conversation a little bit confused so that's one and so kind of going back to your original question you kind of framed it around that right that there was a lot of hard science investing and that we don't do that anymore and maybe we take that as the first point and go I don't know bit by bit from there so hard science investing I do think has fallen off right and I think that's part of what you're doing Elon is sort of trying to bridge that gap of how do you at least get that started and certainly you know I think the valley was originally built on hard science investing I think circa 2000 I don't know pick your time frame 2005 through 2000 mid-2000s right there was a lot of investing that followed that same basic model that oh if I have some great technology breakthrough that's IP defensible this is my road to riches and I'm going to do I'm going to build a semiconductor industry over again in energy and I'm going to build the biotech industry in the pharmaceutical life sciences industry over again in the biofield side of the house and that's what you did see in 2006-2007 when you saw a lot of Sandhill Road investing around these technologies and I think Gabriel you made the point that that didn't work out so well we know right that didn't work out so well a lot of those investments did not work out so well and I think one of the fundamental things that was not well understood which is fundamentally obvious right in retrospect was that whereas in those other markets in pharmaceuticals and in IT you had early markets that would pay a lot of for functionality so if you got something to work somebody would pay a lot of money for it then you could get to manufacturing scale and it could be cheap right but if you just got it to work at some manufacturing throughput that was valuable in itself and in energy markets nobody cares until you're economically viable and so the problem with these hard science technology in energy is largely that problem of not the overall capital required but how much capital is required before you can show that you've done anything useful and so a lot of the money that went in in sort of 2000 that 2000 timeframe was highly misguided I think that and then there's sort of these backlash effects that happen right so then people feel like ah it doesn't work quite honestly I think cylindra was very negative you had to say like nobody asked you didn't have to bring it up no but it caused like it caused a whole sort of sentiment right around oh this just doesn't work like this was just a fundamentally bad idea we we can't do anything in energy and I think your question sort of brings back some of those tones because it's all about hard science there were actually a number of investments made during that time that weren't about hard science there were quite successful and so you know solar city oh power these are energy companies they are more business model oriented they are maybe more software oriented they were they had the elements in place that you could build a business that was commercially viable quickly rather than having to do depend on a lot of scale effects fundamental technology effects and so I think that's one big change that has occurred the other thing I would say is that there are actually closed-in funds that are doing venture investing they may not be as much you know Planner is certainly still doing it Coastal is still doing it so the big names are are NEA so the big names are still involved but you also have particularly now the emergence of a number of new funds emerging that are focused on energy with particular focus areas geographic whatever it might be but you're seeing a new set of funds emerge so to just take up on that point there was a cycle there was certainly an early effort you know something like 2004 it started by 2006 or 7 every firm on sandhill road had a partner doing energy tech investing of some stripe or another a lot of that investing was informed by a model that said you know you get to this first viable product and then you pour a lot of money into sales and manufacturing and the thing takes off and you know your wins pay for your portfolio very nicely and that model didn't work and then that was coupled to the great recession and so firms you know were suddenly told by their investors why the heck are you losing this money in this sector that you're not good at go back to what you've proven you can do and then you know then came this latest sort of boom of sort of more software and consumer oriented investing which has become at least on paper and in some instances actually realized very profitable for traditional venture investing but that cycle you know two years ago I didn't think that that cycle was really beginning to come out of the bottom but now there are new firms coming there are generalist firms that are returning to energy technology in some way or another and there are new firms popping up that are have that as a big part of their core where they want to invest so you know things come and things go it's sort of a generic answer but it things are things are cyclical and they're there you know you don't have to be you know an industry specialist to invest only you know to invest in this industry I think it's helpful one of the other things you know that that Mary Ann pointed out hard science does seem to have fallen off it's much easier the barriers to invest it to creating a company a software company are incredibly much lower I think everybody in this audience has probably heard this they're incredibly much lower from a financial perspective of what dollars you need to develop a product and get it out there in some way and prove that there's something that merits greater investment right and you can do that on like five hundred thousand dollars is all it takes to do what took five to ten million dollars ten years ago because you don't have to buy servers you don't have to buy a lot of equipment you don't have to have a huge office you can have a you know five or ten people working on laptops you know in a shared workspace I think it's the capital and sense it's the sort of friction to start right but it's also the potential impact right so it's not just that oh hey it's really easy to get going it's that the impact of what you're doing can be very large or the impact in a financial sense in a financial and real sense so if you if you kind of bring this back to GE I sit here as GE so I represent GE right we're like fundamentally a company that makes equipment we make heavy equipment we're our proudest sort of one of the things that we'd like to brag about the most is GRC our global research center which and we're one of the few firms that has still has a large global research center full of PhDs doing hard science and thermodynamics or material systems or whatever and at the same time I mean many of you've probably seen our commercials with you know sort of oh I'm a coder but there is and if that's not just to be hip and cool and try and like recruit people right that there's a very real opportunity in applying IT into traditional industry which is largely untouched by the advances in IT right so you have the fact that you know consumer and enterprise back office have been fundamentally transformed by an IT revolution that has you know changed the hoteling industry has changed the car industry has changed the way real business is conducted and at the same time in these traditional industries you have workers running around with clipboards and transcription you have assets that can't tell you anything about how they're operating so you don't have to schedule maintenance you're not coordinating your supply chain and so there's real economic impact that's delivered from that that has huge energy impact right because you run your you run your operations more efficiently that's always your lowest hanging fruit on energy and so the impact from an energy perspective of applying digital is huge and I think that's the other thing you're seeing it's easier from a capital perspective but you also have real contribution that can be financially rewarded can I make two quick points and one of these things is something that Ilan and I have discussed and discussed years ago right two three before he started Cyclotron Road and that's in IT in software and in you know sort of the app driven economy you can be 22 and start on this career of startups and even if you're first and your second don't succeed at some point you you're going to succeed and there's this universe of people you know who have money from Google and Twitter and PayPal and all these successful places who will invest $50,000 $100,000 in your venture and if you're decent eventually you're going to have a you know a million or two million or five million dollar payday that that doesn't mean you sold your company or went public that just means like you got this aqua hire model for 20 or 30 million dollars and while five million dollars sounds like a lot of money to a founder if somebody's really been doing it for 10 years and they're a great software engineer they could have been making that money somewhere else you know and made that same amount of money over that time period but what it means is that those entrepreneurs can do that can try and fail and try and fail and know that they've got a career where they're not putting their financial future at risk there's this model and an energy tech where you can try for 10 years and end up with zero and the economics of what it takes to get a venture across the finish line mean that for the earliest of investors there's no return unless they take it all from the entrepreneur well then you need things like Cyclotron Road you need other ways of launching companies so that people come out of it sort of past that first seed stage having held on to a decent portion of their company otherwise as a young entrepreneur it's it's hard to get into this field right so that was something that I remember us talking about over coffee or something harder years ago right and thinking there must be a solution somewhere and I you know I think Marianne you raised a good point right which is and my I live in this kind of hard so it's hard tech world there is no question that an enormous amount of impact can be made in computing and I was thinking you know one of the sort of architects with me of the Cyclotron Road program is Mark Johnson who's sitting here in the audience were partially supported by the Department of Energy Mark is the head of the advanced manufacturing program for DOE you know hard manufacturing technologies and what he will tell you is probably the biggest opportunities in transforming manufacturing are digital technologies right it has to do with right 3D printing is more of a computational algorithm problem than and a big data problem than it is a hardware problem and you sense or a manufacturing line the throughput advances you can have their and I think that is a very very very important point I guess I'd give a perspective and one of the reasons why I'm doing this is because when I sit and watch a debate you know by Bert Richter and C2 and these folks and I think about the solutions when they talk about the next 50 years and 100 years a lot of those solutions really are physical how do we transform our physical infrastructure and I had this really interesting moment I was at a conference I can't even remember where but Tim Warner who's the CEO of Sunpower one of the most successful solar companies that really drove that revolution was talking about the future of Sunpower and you know there was the full disclosure up front and then he talked about the opportunities for the business and he talked about how solar is going to be a trillion dollar business and almost everything he talked about from a technology standpoint and an innovation standpoint was soft software it was about customer acquisition it was about distribution new models for demand response etc and and I sat there and said wow solar is a trillion dollar opportunity in industry and Sunpower has all these opportunities but let's all remember that Sunpower would not exist if a guy named Dick Swanson didn't quit his job here at Stanford as a professor in physics to go start a company in solar at a time where that transformation wasn't really imaginable so that's why the focus at least for me on that piece and I think we're we're totally diverging here that's great yeah oh god something else you said and you followed up on also that we've found is things that we take for granted here about software and about data and big data and machine learning tools are really foreign to much many industries and many segments of the economy that have that where they can have huge impacts and we've got two companies in our portfolio that we've figured out are actually big data and machine learning companies that are taking those tools to industries that haven't seen them you know literally one is just how do you make develop materials better and how do you have a more informed opinion about where to focus your development efforts and then the same tools that that data analytics and and it's a machine learning and a big data set and applying it across you know tools that are very known here but aren't known where Fortune 500 companies started out like oh you can't do that for us we know how to do this and then you know after our first engagement they were like oh wow we didn't think of that that's great and signing a much longer term deal with us and so that company just raised it's around with us and you know very traditional software data focused investors right another company did some discovered something similar in the ag space it was it was using it for using these tools for its own purposes working with big ag companies and those companies saying hey can we can we use that tool that's really cool and and and from our perspective it's sort of hard to believe that those tools are or what they found novel but you can do this you can take these tech tools and apply them to other industries where where they're not as commonplace I think one thing that's great just a quick quick point I think one thing that's great as I hear Mary Ann and Gabriel talk is we talk a lot about the past and how people invested in the space and one thing we tell our entrepreneurs is yes the ecosystem looks different and in some ways that's harder but by the way you know you have the benefit and the ecosystem has the benefit of seeing that movie play out and whether you're innovating or the intersection of software materials or materials you have the chance to be a lot smarter and not walk down a path that ultimately is going to kill you and then the question is are there enough of those paths to walk down yeah I think that's right I think just we clearly have gone a long time on one question but one thing because what we've sort of set up the storyline right is 2005 lots of enthusiasm and then we sort of set up the cratering but I think that what we didn't sort of finish that storyline with is that there is I think a tremendous resurgence going on and I think that we're in the early days of that resurgence so if you look kind of 2005 it was all enthusiasm we went into sort of a cycle of policy uncertainty that was I think counterproductive but it was sort of investment in advance a little bit if you flash forward to today you're seeing very profound effects of energy change and disruption occurring it's not sort of hypothetical anymore all right real things are happening in in Europe the utilities are actually splitting apart because distributed generation is so significant and it's changing the entire structure of their energy industry the business models that go with it is not hypothetical it's not something that's coming it's something that happened and impacted billion multi-billion dollar market cap companies right you look at GE we launched current we started a new business unit to go after a market segment that we didn't serve before because distributed generation is absolutely here and customers as taking a real role in what the energy infrastructure looks like is not hypothetical it is very much here and large companies that are in the main conservative have voted with their organization structure that this is here and now so I think that's something that's fundamentally changed I do also think that this kind of new evolution of oh yes there's this whole IT you know revolution that occurred that didn't touch industrial has kind of created that cross section too where a lot of people are rushing or rushing in I think is way too strong but very intrigued by the idea that you could really unlock new kind of the market that not the market be the real productivity gains that you could deliver through applying IT into industrial sector is enormous and there is I think a belief that there is more economic opportunity that startups can go after so I think those things are really bringing about and more policy support maybe interest right let's call it that there seems to be some agreement at least that we want to take action so I think a few of those things are coming together to really stimulate a lot more interest my greatest fear is that entrepreneurs don't know so one of the things that I worry about is large companies know because we feel this and we're deep in it and entrepreneurs in Silicon Valley kind of hanging out sort of saying ah that sort of that in 2000 sector that didn't go so well my fear is that entrepreneurs don't know and there is a ton of opportunity if you can apply if you can go after these markets that are fundamentally in transition right now no that's that's great great I love the dialogue on the first question so I had one more question to maybe run by and then hopefully we'll still have some time for some questions for the audience too but you know the other kind of observation I wanted to make about this great panel is that it really does span the development spectrum to a lot more on the applied research side kind of into prototyping and then Gabriel kind of spanning are able to span several sectors and then all the way down to kind of almost the corporate venture end of the spectrum and so and to kind of get ahead of some potential questions from the audience of course at one of these panels one of the questions is where are you looking what subsectors what specific technologies are currently of interest or more recently areas in which you want to look and I'm particularly interested with this group to see if we're going to have we're going to follow the development spectrum as we go across the panel or if maybe there's there's some overlap in terms of some specific subsectors maybe one or two from each of you that's currently or more recently of interest always I'm going to end up sidestepping this question so let's come back to me so people aren't disappointed right away well I've already alluded to one you know we sort of and maybe it's not a sector but a theme with those two companies I mentioned the first one was Citrine which is doing sort of big data and data analytics for Citrine informatics to to for you know for materials and then there's all sorts of applications within a big company of how you can use this tool and then the other one was a company called Benson Hill which does it has some really sophisticated data analytics tools for for developing new traits in in plants for agriculture and and what we saw is if you have a really good team that that knows one specific industry or sector that can take these tools and and build a product that is useful you can actually create a pretty lucrative business model so sort of taking that big data and machine learning and data analytics capabilities and applying them in places where they haven't been applied to your point that's a theme we're I don't think that's a sector right you know we've done a you know food and ag is a place where we think there's still a lot of room both for financial returns and for impact on a carbon basis and so we keep looking there we have three or four recent investments there but I'm not sure we're done there we're we're frankly we're a little behind the curve on transportation because we never quite found the team and the opportunity we like what we liked and and shame on us because there's been some wonderful companies so we're definitely working on that I'd say that's enough for now we also tend to just be really opportunistic you know we have a company in the mining industry and it was just this team that was able to tell us the story that was so compelling on energy savings and value creation in the mining industry with a new technology and a combination and in retrospect it was data analytics but with some new sensor technologies that we we took a chance and it's really working out well so we try to be opportunistic too we invest lots of things are interesting I'll try and focus my comments a little bit one area that we're certainly spending a lot of time is this idea of now distributed resources and certainly making them dynamic right so volatility in is a real problem and opportunity and I think the potential for end customers to engage much more actively certainly around generation but also around their own load management and being much more active in that and so this idea of distributed resources coordination of those distributed resources in two-way grid overall is a big bucket for us and there can be hardware investments in that there can be software investments in that and I think a lot of them are frankly combinations of both right so I think sometimes when people hear software they assume it's just an app or something but software I think is often fundamentally part of is a key value of a bigger system at Stanford I think there's a program called bits and watts yes bits and watts which I think says that exactly right right that the bits are part of delivering the watts it's not one or the other there's a system that comes together so this idea is sort of dynamic resources two-way grid is a very active area for us as part of that the end customer I think is increasingly important in a lot of these industries where it might have been centralized before and you sold to a single concentrated point is distributed resources is distributed customer sets and so I think that's that's good I think in a sense that you can have faster time to market because they can act faster it also I think gives the opportunity for broader value propositions beside behind than just energy and I think one of the problems of calling things energy investing or clean tech investing is it really narrows the aperture in that somehow it's just you know you deliver an energy value proposition and if you look at what we're talking about which is some of this is around sensors and data a large part of this sort of big disruption we're seeing is combining many sources of data to do many different things and so an energy saving proposition can be part of something else so if I want to run my building better I want to save energy I want to run my manufacturing manufacturing floor better I want my employees to be happier I want my customers to be happier there's a whole set of things I'm trying to do and running that building there's no reason to constrain your mindset just to the energy energy side of the equation and so so I think that's also something that we're increasingly seeing is that an energy really or a company that delivers energy benefit for us is really delivering a broader set of broader set of benefits that speeds up customer acquisition the other thing I think the the other sort of side that we're spending a bunch of time on is oil and gas and productivity enhancements again mainly around in that one mainly around digital and digital machines maybe in terms of advanced drilling techniques that have much more censoring and keep censoring feedback rock characterization seismic or other but the idea of how do you use digital and information to drive greater productivity of these these actual resources yeah so I mean I I flippantly said I'm going to sidestep the question it's it's largely because what areas we're interested it doesn't compute for me because you know we're all the way at the front end of this and for better or worse we kind of have a belief that at the very beginning you know ideas aren't valuable right value creation starts with a person or a group of people and they go build the value they go find the ideas so our process basically is selecting for very talented people who are technically strong enough to go build a team and execute on a vision building technology but who are also entrepreneurial enough and can learn to adapt and figure out where the value is and where the opportunity is so that that's our process but what I'll say and specifically around this this panel on financing this idea of trying to tap into a spectrum of different modes of financing different business models was something we had when we started Cyclotron Road we ran a pilot we brought in six project teams that fit the bill in terms of quality of people about a year and a half ago and what's been interesting is as we fast forwarded over the year and a half what we've realized is of those six there are two projects that are very clearly matched to a traditional venture model they're still early they're still hard technologies but they have a venture story and those two are now being courted by venture capitalists to fund their first round one just as an example in terms of areas is developing a thermionic heat engine an ability to make a basically the most efficient heat engine in the sub megawatt scale that could exist you know in terms of physics and they came in and we thought the big the big disruption here is essentially distributed generation you know 100 kilowatt scale at your house whatever extremely efficient silent no moving parts turned out very quickly they learned that actually the value in the technology to the point of having a premium market was this technology by the physics happens to also be the highest power density propulsion source on the planet meaning you can make a lighter weight propulsion source than any other technology out there including batteries lithium-ion batteries next generation batteries and so there is this idea that someone will pay a lot of money for something no one else on the planet can do first and if they can prove things out including manufacturing you could transform all of distributed generation right so that's one that aligns with venture another is is actually in functional materials and functionalizing 3d printing for structural materials and otherwise there are two out of the six that we very quickly realized are not clearly not traditional venture plays and yet there's still value creation one of them's in the synthetic biology space where our entrepreneurs taking all the lessons learned from first generation biofuels and saying I can take all those lessons learned and make products cheaper leveraging all the learnings and all the capital that exists out there and they're now in discussions with a number of corporate partners for a essentially demonstration of the technology which likely would lead to those corporates funding the scaling and potentially acquiring and two are actually somewhere in between where it could go either way and they're driving towards the first prototype and what's been really exciting for me is we're finding right now to Marianne's point that there is a a renaissance blooming to some extent we're finding that all of a sudden there are a lot of different types of capital out there that can align with value creation and with technology without some of those constraints and and you know these two are moving we have a new cohort of six projects that we brought in I told the story about Dick Swanson there are two guys here Mike McGee who's a professor here at Stanford and Colin Bailey who was working with him here as a student Colin's now in our new cohort working on what we've discussed several times is probably one of the only problems as an entrepreneur working worth working on in solar materials which is perovskites as a next generation high efficiency very low cost solar cell and and again I think right now seeing opportunities both as building that as a traditional venture business or not so right some areas there well well great well we have a few minutes left where you can open it up I think we have a few microphones but go ahead I've not heard anybody until you said that you invested in carbon reduction we have we eat sleep and drink carbon reduction and many many different processes for years and whenever we talk we're self-funded but we didn't want to be every time we mentioned carbon reduction it was what our goal and what we did on farms by the way too people didn't get it didn't know it and we got nothing carbon reduction is the is the whole is the name of the game but nobody is saying there is a carbon reduction funding group or whatever I mean we're not funding carbon reduction and we don't invest in carbon reduction we invest in companies yeah who if they're successful will reduce CO2 or the equivalents in the atmosphere right that is the universe of companies in which we may invest after that it's an investment decision so come talk to me and and you know if we come to the judgment that it's a profitable investment that meets our investment hurdles then we'll start negotiating terms and either you'll think we're too greedy and rapacious or you'll well we'll do a deal but I didn't say we don't invest in carbon reduction that's something altogether different we invest in companies and we need a financial return and that's that you know but there are there are some who view that as an area of investment were one of them and I know a few others quite said the way you did it's always been we make it's been spoken around yeah no we thought a long long and hard about it but that's that's why our investors gave our limited partners gave us their money to invest well I had a certainly had a question out do we have one from the audience yeah go ahead sorry go ahead this would actually be directed either at Elon or Gabriel and possibly Marianne the reason why is we have where a seed stage startup where we do actually have our own functioning low fidelity built in our garage prototype of our device which is specifically to transform the hydrogen fuel cell business into getting away from carbon releasing sources of hydrogen is ours the type of company that you would also look at we would look at it what I'm doing is I could rattle off you know a bunch of questions that we would ask and but happy to look at it for sure okay because we've got our functioning prototype and what we're looking to do is commercialize it at this point and then bring it forward into market sure we'd look grab my card yours are the first companies the first ones that I've come across in four years of trying to shake the trees that we're willing to look at somebody who was actually making a physical product thank you well that's that's discouraging I think there's more than there's more than just two of us on this stage I can yeah exactly it's definitely true that there is a shift towards software businesses I think that's 100% true again a lot of those software businesses come with hardware so I don't want everybody think to think that there is just nobody investing in hardware and there is still certainly many investments that are made that are in strictly hardware only and so I don't want anybody in the room to think that there's nobody in the world that will invest in you that that's certainly not true I think there's a lot of that in four years it's it's just harder to find them it's harder to find and here's one thing that's really important you have to I mean all of us he's got a mission behind his fund I have a strategic focus around my fund of around what we're doing in terms of accelerating the business you still have to make money so you might have a technology disruption but you have to come pitch the economic value proposition the customer who's going to care why they're going to buy it that whole case has to be laid out right I mean it's that's right it's still a financial investment and without commenting on either of your two companies we will look you know that doesn't mean we'll invest and it doesn't also mean that we're right to not to invest right like neither of those things is necessarily true I would say the there are investors out there definitely who who want to fund you know hardware physical sciences even pure physics right the tough part is they tend to be scattered sometimes you definitely have to come with a pitch that is here's how I'm going to make money for you right to any investor I think that's both the chat this fragmentation is both the challenge and the opportunity around what we've been doing building the Cycletron Road meaning we wouldn't be able to support our innovators if we weren't able to find a group of investors and start to understand okay here's how prelude ventures thinks about here's what they're looking for here's how they make money but here's also their strategic requirements likewise GE and you know we've constructed what we're doing with help Gabriel's actually provided a lot of input on how we build out Cycletron Road as has Marianne in conversations over the years and others and you know I just see here evoke for those who don't know Mike Biddle in the room a very new really interesting fund with a whole different strategic mindset you know go meet Mike figure out what he's about I see the Pender and Capricorn in here right we need that community but we also need entrepreneurs like you to understand how to not waste your time in their time so was there another question over here what are the conditions that you're looking for you wish would happen that would accelerate bringing back an upcycle what are those things where we get a virtuous cycle and then the second is if we get a virtuous cycle back what do we need to do to make sure we don't go bust again on the back side I just I just quickly I'd wonder whether we need a boom because I mean what one thing we've talked about you can say oh there was a huge cliff and fall off an investment or you can say there was an unnatural rise in investment and I think what we need is an optimal ratio right I personally believe you know the physical and heart sciences is not optimal but I don't know where the optimal is it might only be twice as much as it is now but a lot better coordinated versus 10 times as much no I think it's an excellent point I think that they're I don't think you meant it quite the way but the word boom I think is something that is worth picking up on I think that's right too much money came in and sort of the late to mid 2000s very quickly with no proof points behind it and then if you look sorry to say this now but if you look at the yield codes too right what happened there was really over marketing of the return expectation and if you just really left it as a stable sort of stable kind of dividend growth return you wouldn't have this implosion now and so I think what you have is this need to sort of pitch things as high growth this sort of incessant need to pitch things as high growth so that it compete with other classes of capital and maybe we shouldn't be doing that right maybe you're trying to find the right source of capital match to the appetite in the return profile so that it's more stable but but those are those are standard investment cycles right that's just typical you know so what was different maybe and whether or not this should be you know first we want to see more capital in the space right we want more early stage more more middle stage more late stage investors I can think of maybe one or two deals over the past five years that we have lost because we didn't move quickly enough right and that's not a good thing right like there's very little time pressure on us and so a fellow investor said and he wasn't being complimentary he's like oh you guys are really deliberate but we have there has been we've been trained that it's okay to be deliberate over the past five years so it would be great for for there to be more capital investing I think it's right I do think more capital is coming in and it's coming in part because strategic are all ramping up and I think because because there's little competition I think there's some people coming in for that reason too but I think the short answer to your question of how you get more capital is actually unfortunately wins right and so one of the things Sue Siegel who leads the GE Ventures team is actually speaking this afternoon and one of the things she's going to be talking about is business models and and multiples right and I think one of the things we haven't talked about here today is that if you look at companies that are being financially rewarded today talking about big companies not just little startups that are getting bought up as aqua hires the multiple on earnings or earnings I mean how they don't even have profits so certainly on profit are much higher if there's this idea of some network orchestration capability which needs which is not part of necessarily fundamental scientific hard science discovery and so we're in a market cycle right now we're investors are not seeing differentiated return in big companies off of fundamental science and technology invention and that's what's causing the whole sort of multiple thing to cascade through and so if that when that dynamic changes because the hardware is all the same and not differentiated and there's a step breakthrough and you'll start to see that change but that's what has to play through but the other thing that was different in 2008 and the first part of 2009 was there was a pretty big belief that there was at least a reasonable possibility of a price on carbon right and regulations matter policy frameworks matter utilities chemical industries oil and gas transport fuels these are regulated industries and the regulatory framework matters so if there was right now the regulatory playing field is probably not even level for all the subsidies that exist for solar and wind and we heard a little bit of talk about that in the great debate you know it's probably still skewed towards burning natural gas for your electricity right so regulation and the regulatory environment matters and that was really different until sort of the summer of 2009 2010 when did the when did the that the carbon bill die right that was a big difference well I think we're we're actually out of time for the panel please join me in thanking our panelists for joining thank you very much