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New Leadership at CalCEF Angel Fund Means New Opportunities for Cleantech Startups

The CalCEF Clean Energy Angel Fund's announcement earlier this month -- that Matthew Lecar will henceforth manage the fund -- is good news for the cleantech industry. Lecar combines Sand Hill investment savvy with energy industry expertise. That means entrepreneurs will meet an investor who understands the value of transformational clean energy innovations, and sees through those that aren't really.

On September 10, 2008, Matt Lecar took the reins at the CalCEF Clean Energy Angel Fund 1, LP. Lecar's particular blend of experiences make him well suited for the rather challenging job of financial planning and development for the fund's portfolio of early-stage, clean-energy companies.

CalCEF Matt Lecar photo on EnergyPriorities.com

Matt Lecar, CalCEF Angel Fund's new Fund Manager, combines Sand Hill investment savvy with energy industry expertise. (CalCEF photo)

As the traditional VC community clambers up the cleantech learning curve, they're discovering the challenges of the multi-trillion-dollar energy industry, with its unfamiliar dimensions of policy, reliability, scalability and public relations. Cleantech entrepreneurs in search of money are teaching VCs that energy bears little resemblance to software and dot-coms.

Matt Lecar stands in sharp contrast to energy newcomer VCs: It's the entrepreneurs who might learn a thing or two. With 18 years in the energy industry, including stints at two of the world's largest utilities (PG&E and EdF), Lecar left the respected VC firm Trinity Ventures to join the fund. (Trinity's only cleantech investment, Soliant Energy, a rooftop CSP play, predates Lecar's time at the firm.) Silicon Valley is a long way from the Harvard Kennedy School of Government, where as a graduate student Lecar focused on energy and environmental policy.

"Coming to the investment world from the energy industry, I apply a different filter," says Lecar. "I understand where the technologies fit, the requirements they have to meet, and just how difficult utilities can be to deal with."

That kind of experience is invaluable when the business plan depends on influencing incentives, developing public programs, or dealing with utilities as sales channel partners. Many founding entrepreneurs lack that experience and, if their innovation is less than obvious, they've been returning from Sand Hill Road empty handed.

"Coming to the investment world from the energy industry, I apply a different filter..."
--Matt Lecar, Fund Manager, CalCEF Clean Energy Angel Fund

That doesn't mean just any cleantech company will find easy dollars at Lecar's door. Not only is he dedicated to clean energy -- no clean water or air deals, thank you -- Lecar sees through the green veneer of technologies that are merely positioned as cleantech.

"Our portfolio companies must have a significant impact on reducing the energy and carbon footprint of an activity," Lecar says, noting that some ideas could technically improve energy efficiency, but are likely to fail because efficiency isn't in line with the business objectives of the target market.

"If you give data center managers the ability to increase server density within their energy and thermal constraints, they'll take advantage of that ability to generate more revenue, not to reduce their energy consumption," he explains. Translation: A hybrid car with amazing acceleration but no better gas mileage is not an energy efficient vehicle.

The fund was established to bridge the gap in the investment cycle between seed and venture capital funding. Seed rounds average a few hundred thousand dollars, while most venture capital funds don't consider investments under one or two million. Angel investment accounts for almost as much money invested annually as all venture capital funds combined, but into more than ten times as many companies.

Unlike individual angel investors putting in their own money, the CalCEF Angel Fund is a limited liability partnership. Its members join forces to provide critical capital to support the commercialization of new, potentially transformational clean energy technologies.

The not-for-profit California Clean Energy Fund (CalCEF) put up the founding seed investment to establish the for-profit Angel Fund. CalCEF's relationships and network originate much of the newer fund's deal flow.

CalCEF's board includes some key energy policymakers in the state, and two of those board members sit on the Angel Fund's investment committee.

"CalCEF's board members have their hands on policy direction in the state," says Lecar. "They're interested in actively helping build our investments and help our companies."

Lecar doesn't discount the value of those relationships when it comes to navigating a sea of complex policies and utility regulations.

"When our entrepreneurs need a meeting with a Commissioner or legislator, we can arrange it."