Gen Y entrepreneurs bet big on clean-tech innovations

BANGALORE: It is not everyday that a young consultant at McKinsey & Co, one of the world’s largest management consultancy firms, trades in a 
job at the firm’s Seattle office for the rough and tumble of business in rural India. But that is just what John Howard did when he launched Duron Energy, a renewable energy company that has just started sales of solar-powered plug and play devices for lighting and battery recharges in villages across Karnataka and Uttar Pradesh.

Elsewhere in rural Bihar, Gyanesh Pandey, chief executive officer and co-founder of Husk Power Systems, and his team of co-founders — that includes Charles Ransler, a class of 2009 alumnus of the University of Virginia’s Darden School of Business, and Manoj Sinha, also a Darden alumnus, who earlier led microprocessor design teams at Intel — are lighting up over 10,000 homes and small shops across three villages. Husk Power owns and operates miniature power plants generating between 35 kw and 100 kw of electricity from paddy husk that it supplies to consumers in off-grid villages.

The start-up is expected to raise a fresh round of venture capital this month to scale up operations to more than 60 villages and to set up 50 plants to generate electricity from the current level of 22 plants by May 2010. “We have an open-source model of operations and can very quickly replicate across multiple locations,” says Mr Pandey, an electrical engineer from IIT Varanasi, who envisages Husk Power Systems rolling out services akin to a cell phone company.

India is emerging as a laboratory for innovations in the alternative energy space with entrepreneurs and investors looking to build innovative solutions to address a power-starved economy. This is happening at a time when globally investments in clean tech are losing their luster. Investors are shying away, while entrepreneurs don’t seem so gung-ho anymore.


North America’s share of clean technology venture capital was down from 72% in 2008 to 62% in 2009, a four-year low. Doubts about viability is making investors wary. But India, with its huge energy problems, is offering hope and salvation to entrepreneurs and venture capitalists eager to establish the potential of alternative energy. Mr Pandey and Mr Howard are a part of this growing tribe.

“Water and energy are clearly the two sectors of the future,” says Vineet Rai, founder and chief executive office of Aavishkaar Venture Management Services, which will raise a $100-million fund this year to invest in social enterprises. It is such momentum that venture capital investors will aggressively target through 2010. In just the last two months of 2009, venture capitalists put in $40 million in three clean energy companies, including the year’s second-largest venture capital deal — $19 million invested in Soham Renewable Energy — according to data collated by Venture Intelligence.

Globally too the pace of investments in the clean technology sector is expected to quicken. Later this year, iconic venture capitalist Vinod Khosla is expected to launch a $1.1-billion fund for investments in the clean technology sector, according to CleantechGroup. A chunk of this is expected to be invested in India. “This year, we will invest between $8 million and $10 million with a focus on alternative energy and healthcare,” says Varun Sahni, India director, Acumen Fund, a global venture fund.


Source: ET