Los Angeles Clean Tech Incubator (LACI) is a non-profit organisation formed with a mission to help make the city an epicentre for clean tech innovation.
Los Angeles Clean Tech Incubator (LACI) is a non-profit organisation formed with a mission to help make the city an epicentre for clean tech innovation.
Clean technology and green innovation is big business, as investors and entrepreneurs look to capitalise on a growing global demand for renewable materials and environmentally friendly solutions.
After the Global Financial Crisis, investment in clean tech was sparse - progress can be slow, expensive and fraught with risk.
But as prospects rebounded, the City of Los Angeles was well prepared to take advantage of the pickup in investment having made the development of a green economy a cornerstone of its primary economic strategy.
At the heart of that strategy is the Los Angeles Clean Tech Incubator (LACI) - a non-profit organisation formed with a mission to help make the city an epicentre for clean tech innovation. It was founded as a partnership between local government & universities - with a number of other agencies and organisations contributing as part of the Clean Tech Los Angeles alliance.
It was considered a high-risk high-reward project when it was founded in 2011.
But three years in, 33 companies have taken part and the alliance has gone from strength to strength.
Collectively, those companies have attracted US$50 million investment, with revenues at US$10 million in 2014 - a figure expected to top US$30 million this year.
It's had a positive impact on the wider economy for the city too, with 475 new jobs created while generating $104 million of economic value.
Executive Director Fred Walti says that's an impressive result considering the time and investment taken to develop clean technologies.
"Our model isn't typical - it isn't really graduating companies. It can take a long time to develop clean technology, some of our companies have been working on their prototypes for three or four years. That means, when we're looking at companies, we say to ourselves, are we willing to spend five years with these companies?
"First we look at the technology or the product and assess to what degree there is a market for the product, is it unique, disruptive, protectable? We look at the management team to see if they're capable of getting the company to the next milestone. Do they have the ability to get it to market?
"Where we differ from how a traditional firm would estimate value, is that we might accept a company that we think will never be a VC fundable company - maybe their market will never be big enough, but it has the potential to play a role for the economy here in California. We want to build companies and return investment to the investors, but we also have a mandate from the public side to build an economy and infrastructure."
At present, LACI has been predominantly restricted to small-end startups, but the world-class LA Kretz Innovation Campus being built to house the incubator should help it take that next step when it opens later this year.
The 5.5 square kilometre campus will sit in the heart of the Clean Tech Corridor, comprising incubators, offices, an enormous research and development facility, a training centre and conference venue.
"The move will force us to scale and perhaps shift our focus," says Walti.
I would love to talk to companies in New Zealand operating in this space and learn what's going on. It would make sense that there would be some good fits.
Fred Walti.
"Up until now the focus has really been from the garage to series A funding. What this will allow us to do is to work with and help companies further down the line."
Both the public and private sector are funding the campus, with LACI not forecast to become a fiscally self-sustaining business until next year.
Financial targets have been broken every quarter since inception, generating revenue with contract work carried out for other organisations -- including research, and the development and running of other incubators in the region.
To really develop scale however, Walti says developing deeper links and synergies with the broader international community is required - a factor the opening of the Innovation Campus can only improve.
"We had come to the conclusions that although we are Los Angeles based, the greatest market for the companies we work with is often going to be outside the borders of the city, the state and the country.
"The problem is, if you're not GE or SAP - doing business globally can be really difficult to do.
"So what we're trying to accomplish is establishing a network of like-minded organisations around the world so we can exchange companies and operate an international landing pad programme for clean tech companies.
"About a year ago we started to increase our footprint and are in the process of building satellite incubators throughout the city. We're building one in Northern California and are in discussions to build another on the West Coast of the United States and one in a Northern Hemisphere city outside of the US."
So far LACI have established partnerships with 12 different organizations in 10 different countries and Walti hopes to be able to add New Zealand to that list in the near future.
"I would love to talk to companies in New Zealand operating in this space and learn what's going on. It would make sense that there would be some good fits."
