Tuesday, Aug. 26, 2008 | The stories of how PowerGenix and Biomatrica Inc., two San Diego businesses, got involved in the growing clean tech industry are very different. The former was an existing company that stumbled in while chasing investment, while the latter was a start-up that set out to solve a scientific problem.
Today, both are clean tech evangelists hoping the industry can become the next big engine of business and economic growth in the region.
Clean tech is loosely defined as any product, service or technology that uses limited or no nonrenewable resources or creates significantly less waste than conventional businesses, according to the trade group Cleantech Network. Industry sectors include wind power, biofuels, lithium batteries, bio-based plastics and solar photovolatics, and increasingly, tidal power technologies, hybrid vehicles and silicon-based fuel cells, among others.
Industry enthusiasts hope to establish a strong clean tech cluster in the region, building upon the success of San Diego’s telecommunications and biotechnology sectors. Start-up companies are emerging and some existing companies are reinventing themselves to recruit top-notch employees looking for a green workplace, appeal to eco-savvy customers and attract new investment.
“Clean tech can be San Diego’s next biotech within a couple of years,” said Dan Squiller, chief executive officer of PowerGenix, a company that makes toxin-free rechargeable batteries. “This isn’t a trend that will go away.”
There are at least 148 clean tech companies in the region, including 67 that are involved in energy generation. In 2006, the most recent year for which venture capital figures are available, $2.9 billion was invested in the industry nationally. Of that, six San Diego companies got $54 million, according to a report by Connect, a local nonprofit that assists fledgling companies.
But as the growing industry moves into the business mainstream, it will have to face many of the same challenges biotech and telecomm have grappled with for decades. Start-up companies or companies looking to grow often have difficulty finding workable space in San Diego, a region with stringent land-use regulations. Also, quality of life issues — things like affordable housing, roads and public transit — continue to be problematic in the region’s efforts to draw new business, the Connect report said.
And while clean tech firms and trade organizations are encouraging companies to capitalize on the growing movement, some business leaders said they’re worried that companies might overhype clean tech claims to turn a profit, compromising the industry’s integrity.
Clean tech took root when venture capitalists began looking for new moneymaking enterprises after the investment market bottomed out in 2003 following a technology bust. The budding industry seemed like a good bet; the cost of fossil fuel energy was on the rise while clean energy costs were beginning to fall, and consumers were beginning to demand greener choices.
When Squiller took the helm at PowerGenix that year, the company was using toxic materials to produce rechargeable batteries for things such as power tools and medical devices, but competition was stiff and Squiller was looking for an edge.
His strategy was to appeal to new customers and investors by re-engineering the batteries to be toxin-free and 100 percent recyclable.
Squiller’s efforts paid off. PowerGenix, together with ISE Corp., a company that develops hybrid electric engines, raked in 78 percent — or $42 million — of San Diego’s 2006 investments, according to the Connect report. PowerGenix also scored a contract with Sears when the company wanted an environmentally friendly battery for lawn products.
“I wish I could say we got into [clean tech] because we were smart and insightful and had our finger on the pulse of the market, but really we needed some marketing leverage,” Squiller said. “Once we went clean, I realized we had really hit a trend.”
Judy Muller-Cohn, a self described “hard core environmentalist,” and her husband Rolf Muller, the founders of Biomatrica, were determined to make the start-up clean tech from the start.
Both scientists, the couple were inspired to find an alternative to storing DNA and other biological samples in freezers after an electrical lapse ruined 1,000 of their samples while they were away from the laboratory on a ski trip.
In 2004, they created a dry-storage technology — a synthetic polymer that stabilizes samples — that can preserve samples at room temperature, saving money, space and energy by eliminating the need for freezers. The product — called SampleMatrix — essentially allows customers to “shrink-wrap” their samples, Muller said. Just add water and the genetic material is ready for testing again.
“Scientists get very nervous if something happens to their freezers,” Muller said. “What canning did for the food industry is what we can do for the biotech industry.”
The product is mostly used by research institutions, the military and crime labs.
The financial future of clean tech appears strong. Cleantech Capital Group, a Michigan-based research firm, predicts it will account for $10 billion in venture money in North America between 2006 and 2009, compared with $6.4 billion in the previous three-year period — a 56 percent increase.
But Squiller said such a surge could prompt companies to exploit the clean tech claim.
“People are going to try to take advantage of it anyway they can. Companies will take shortcuts and try to milk it,” he said. “Customers will have to be discerning.”