“We really think the world is going to 100 percent renewable energy. Hawaii is just getting there faster.”
For clean energy startups, the action’s in…Hawaii? Believe it. A combination of ambitious laws, island economics, and the community-building prowess of a powerful startup accelerator have turned the island paradise into the hot place for clean tech innovators.
THE PERFECT BACKDROP
The potent combination starts with Hawaii’s isolation. The state has the highest electricity prices in the US — more than double the national average. That makes it possible to bring clean energy technologies to market in Hawaii at higher price points than elsewhere and still be competitive with existing options. Meanwhile, thanks to a 2015 law, Hawaii’s utilities need to get 100 percent of their power from renewable sources by 2045. “That very aggressive goal has demonstrated the need for innovation, because we can’t get there with the technology that we have today,” explains Dawn Lippert, co-founder and director of Energy Excelerator, a Honolulu-based national program for startup companies across energy, water, transportation, agriculture, and cybersecurity.
Finally, mix in Lippert’s own organization, a for-profit/nonprofit hybrid that’s creating a community of big funders — think the US Navy and tech giants like Panasonic — and spunky, mission-driven startups to solve challenges across every sector energy touches. “Our mission is to help solve the world’s energy problems, starting in Hawaii,” Lippert explains. “We use Hawaii as a test bed and early proving ground for companies to come to market, and then we help them scale globally.”
The result is a dynamic and growing community of diverse stakeholders in a unique position to truly change the world. We spoke with Lippert, who co-founded Energy Excelerator in 2013, to get the scoop on EE’s mission, challenges, and hopes for the future.
Can you simply explain what Energy Excelerator does?
Dawn Lippert: Our program does three things: we provide funding for companies to put projects on the ground — early deployment; we help companies find customers to pilot with and help them get traction, whether their customers are utilities, businesses, commercial, industrial, or consumers; and we build a community around these companies. We have 42 portfolio companies, and we have a very strong peer-to-peer philosophy.
Our primary organization is a nonprofit, funded mostly by the US Navy as a commercialization program for important technology. We’re also funded from the US Department of Energy and from a number of corporate partners such as GE Ventures, Blackstone, Hawaiian Electric Industries, and others. It’s a public/private model on the nonprofit side.
We also just launched a for-profit sidecar fund. We make grants up to $1 million on the nonprofit side, and then the venture capital fund follows-on with investments into our fastest-growing companies.
Can you speak a little more about what’s so special about this island world that you’re getting to operate in?
DL: It’s been a perfect backdrop for companies to come in and innovate. When I lived in DC , I focused on energy as a vertical market. But when you live on an island like this, you start talking about energy and immediately you start talking about water, then how energy impacts agriculture, and is it secure? So you really need to speak to cybersecurity — and even education: do we have the right people for the new economy? Everything is so interrelated.
At Energy Excelerator, we take a two-pronged strategy, both top-down and bottom-up. Top-down, we look across the entire system and say, “Okay, here’s the soft spot.” We need companies that are, for example, able to address restaurant energy efficiency, which is an underserved sector in Hawaii. Or we need companies that are going to be able to put fallow agricultural land to productive use. But then our strategy for addressing the problem is to find the best-in-class, most exciting, innovative startups and entrepreneurs from around the country to solve those problems in a bottom-up way.
We are certainly hoping it will go beyond Hawaii’s shores, but being here where you can get all the big decision-makers in a room together at one time is very powerful. You can have a look at the entire system. We’re relatively unique in that way, but this model can be applied to other places. We really think the world is going to 100 percent renewable energy. Hawaii is just getting there faster.
This notion of 100 percent is really important to us. We use the hashtag #innovatingfor100, and the goal is technically 100 percent renewable energy by the year 2045, but we think of it much more expansively. We actually think of it as 100 percent of our systems. That includes agriculture and water, but also working for 100 percent of the people. How do you make a transition in a way that works for people across the income spectrum, across demographics? And not just in Hawaii but around the world and our supply chains?
You get a couple hundred applications every year to be part of the program, and you accept less than 7 percent of the companies that apply. What are you looking for in the companies that make the cut? Are there any key things that are instant red flags or instantly elevate a company for you?
DL: We want all the companies to be part of a community. You can imagine that in 10 years, working with about 15 companies a year, we actually get to work with about 150 CEOs and leadership teams. We’re building a people-based network of these entrepreneurs who are going to be the next generation of change-makers in this industry.
We’re looking for people who are happy to add to that ecosystem in terms of skill or talent and also want to be part of a larger system change. They’re very interested in being larger than themselves. That’s often the case with entrepreneurs in this sector because if they were not mission-driven, they’d probably be in social media or tech or something else, right?
We also think diversity on teams makes better teams. We really like to see diversity in terms of men, women, business expertise, technical expertise, age, and geography. We can look across our portfolio and see how our diverse teams are doing versus other teams.
And then we also look for traction. In our demonstration program, traction is required in order to get the project funding from us. We’re looking for companies that have a repeatable, scalable business model already. And for companies that don’t, they go to our Go-to-Market program, which is basically where we pay them $75,000 to work with them for a year to develop that kind of traction and customer pull.
What are some surprising lessons that you’ve learned?
DL: There are so many. One of the things we’ve learned is that how people manage both up and down teams is a really strong indicator of company success. We now interview not only the founders and company leadership and entrepreneurs, but if it’s bigger than two or three people — most of the teams we work with average around 10 members — we also like to interview either the newest person or the person that is the ops assistant or the lowest person on the totem pole. Trying to get a sense of the company culture is actually incredibly important to the long-term success of the company.
We’ve also learned that people with a growth mindset are much more successful. We’re looking at lots of different ways to interview for that or test for that. What I mean is the people who think there is something they can learn from other people, and that they don’t have all the answers. We’ve worked with entrepreneurs that are at different points on that spectrum. We’ve found that our most successful entrepreneurs are the ones who ask a lot of questions, listen really well, and are always learning and growing that part of who they are.
And in terms of business, we’ve sometimes taken companies that are not financially strong and that’s been okay as long as we know the leadership team really well and they have a path to where they’re going. That may be a red flag for some folks, but we pay much more attention to the business, the customer traction interest, and the entrepreneurs themselves. We’ll help companies in financial hard times because all startups go through them.
What trends do you see in the clean energy industry?
DL: Using data to reduce capital investments and reduce costs on the grid and also add more services and options for customers. We’re seeing that not just in energy, but in transportation and water. It has been really interesting to help the different sectors and see them be able to use these tools. For example, we have a company in the water space called WaterSmart. They use big data to compare your water use with your peers’, predict water use, and look across the energy system at what’s happening and use that to drive the behavior for conservation. Five, seven years ago, we saw a lot of these companies in the electricity space. Now we’re seeing them emerge in the water space a few years later. That’s one of the trends that we’re following very closely.
The other trend that we’re seeing is huge expansion of corporate investing and interest in this sector. Just last May we had our entire team in Silicon Valley for the week. We had a big event at Google X, with 28 of our teams there presenting their companies. And we had over 150 corporate investors.
GE Ventures, one of our corporate partners, was there with four people. Toshiba, Panasonic, Hitachi, LG, Siemens — all these guys were there and they’re really keenly engaged in the innovation ecosystem and looking for new companies and new paths to market.
“We’ve found that our most successful entrepreneurs are the ones who ask a lot of questions, listen really well, and are always learning and growing that part of who they are.”
What’s giving you hope right now?
DL: I love working with entrepreneurs. Where others see huge challenges, entrepreneurs see opportunity. That’s a really special group of people to work with.
I also really love working with people that are new to this industry and seeing a lightbulb come on. We have a fellowship program where we pay for new grads to work at the startup companies. Last year we had nine fellows, and seven of them were women, which is awesome. Three of them ended up with jobs with the company coming out of the fellowship.
They catch the excitement and fever of working in an industry that’s not only changing really fast, but everything you do to help one of these companies succeed is climate-positive: every single new customer, every single new sale, new product — all of that helps the world, in the larger sense of it. Seeing that fire in young people as they join new companies and become part of that mission has been extremely rewarding.
PACIFIC INTERNATIONAL CENTER FOR HIGH TECHNOLOGY RESEARCH
Energy has been identified as a challenge for the US Military and Hawaii has a goal of running on 100% renewable energy by 2045. The government has a vested interest in developing new energy solutions and provides grants to the program because it can scale solutions faster by leveraging private capital and strategic partnerships. Corporate and philanthropic partners also support the program.
Companies with an innovative technology (working prototype) and a team of two or more people apply and 7 – 10 are chosen to participate in the accelerator.
Companies with an innovative technology, team of two or more people, and customer traction apply and 5 – 8 are chosen to participate in the accelerator. Energy Excelerator participants give back between 1-6% equity to the program, mentor other companies coming through the program, and recruit other companies to participate.
Lippert’s Top 3 Pieces of Advice for Mission-Driven Entrepreneurs
1. TRY NEW THINGS.
You may fail, and that’s a good thing, because you definitely learn something and the next thing you do will be much better for it. When we started our first funding program, it was not successful. The way it was structured was wrong and incentives were misaligned. We had to end it and interview a lot of people, learn a lot, and start something new.
2. LOOK FOR OPPORTUNITIES TO PARTNER WITH DIFFERENT WORLDVIEWS.
People really flock to those with like-minded ideas, but some really powerful partnerships can come out of partnering with people from different perspectives — or even the incumbents in your industry. They often will bring a huge amount of value. We have an unexpected coalition of partners, including utilities. In disruptive energy dialogue, utilities are not the first people that new entrepreneurs want to partner with. But we’ve found they’re really critical for moving the ball forward.
3. BE BOLD IN ASKING PEOPLE FOR PERSONAL MEETINGS.
Ask the industry leaders you really respect out to coffee or lunch. Come up with bold, interesting questions. People like to be in interesting conversations.