Cleantech Startups 101 – Denis Connor, EIR at Foresight
As part of our ongoing “Cleantech Startups 101” blog series, this week we interview Denis Connor, one of Foresight’s Executives In Residence (EIR). Denis is the former Chairman and Founding CEO of QuestAir, a developer and supplier of proprietary gas purification systems for the biogas and industrial hydrogen sectors. He was also the CEO of Angstrom Power and a founding director of Hydrogen and Fuel Cells Canada and General Fusion. Denis is currently on the Boards of Inventys, which is developing a novel CO2 flue gas capture technology, and Carbon Engineering, which has a CO2 direct air capture pilot plant in Squamish.
What’s your background and how did you become involved with Foresight?
My background is in electrical engineering, and I worked in information technology until the 1990s. Over the years I got to know Mike Brown, who’s a well-known local venture capitalist. He and his partners were considering financing QuestAir and asked me to chat with the founders about taking on the CEO role, which I did. While at QuestAir I hired Jonathan Wilkinson, who is a former Foresight EiR and is now an MP and the Parliamentary Secretary to the Minister of Environment and Climate Change. Through various connections I was asked if I wanted to take his place at Foresight. I did and I focus on helping breakthrough energy technology companies get to the next level.
What are the most common challenges faced by cleantech entrepreneurs in Canada?
The biggest challenge is that the funding models that work well for the venture capital community with regard to information technology don’t work as well for cleantech. The commercialization cycle for software is shorter than cleantech’s, and investors often have the ability to move their money out within five years or so. The cleantech space has a longer development cycle and there isn’t a well-defined liquidity market yet. This is why you see governments playing a bigger role as an investor in the sector, but the potential pitfall of that approach is that companies become dependent on government funding and lose sight of the customer and of the need to become profitable.
What are the greatest opportunities?
Climate-related cleantech. Consistent market and policy signals are starting to emerge around the transition to low carbon. Take a look at some of the plans that countries are putting in place for the next 10-20 years and figure out how you can help them deliver. As with any product, start with the customer and build out from there.
The question is, how long are investors willing to wait to see a return on their investment? The Breakthrough Energy Coalition that Bill Gates established is an interesting example of longer-term capital potentially being brought to the table to drive these kinds of technologies. Here in Canada, Carbon Engineering, Inventys and General Fusion were all founded and funded by people with longer-term interests – people who want to do well by doing good, and who see there is potentially a huge payoff in the long run. There are many other examples of companies like this in Canada and the U.S.
What do you see as the success factors for being a successful cleantech entrepreneur?
Surrounding yourself with the best and the brightest people – people who have the ideas and energy to implement your vision, and who can influence others to support it. It’s also a tremendous advantage if you can find high-profile people who are willing to put money or their reputation on the line for your company. For example, Inventys brought on former US Secretary of Energy, Steven Chu, as a board member because he sees carbon capture and sequestration as something we have to do.
What’s a common mistake that startups make?
They often have difficulty conceptualizing what success looks like, and thinking beyond their technology idea in order to build a successful company, i.e. a profitable one. The idea is critical, of course, but you also need to build a team that can support implementation. You need to think about all the components of your business, from human resources to customer supply chain management. A lot of the training that is offered by Foresight and others has been developed with this in mind: helping entrepreneurs think holistically about their companies and the validation of the core value proposition of their technology/product idea.
If you had one piece of advice you could give to an entrepreneur with a cleantech idea, what would it be?
Make sure that you’re thinking big enough. Make sure you have a problem that’s really worth solving. A technology that contributes to incremental progress isn’t enough. We need breakthrough technologies – technologies that are going to address at least 2% of global emissions. Consider Google’s research, which concluded that – even if you exploited all the existing technologies – we won’t be able to address the total scope of our fossil fuel dependence which is what’s driving climate change. We need additional breakthroughs.
If you’re going to spend three to four years building a business, make sure there’s a market for your product. Be as perceptive and thoughtful as you be because you can’t get that time back.
Why do you do what you?
I have five grandchildren, and I’m realizing that we may be facing pretty severe climate change impacts earlier than we expected. Finding solutions before we are in crisis is what drives me.
For more information on Foresight’s EIR program and other services and support it provides to cleantech startups, check out our website www.foresightcac.com/services