For more than a decade Meg Arnold has been actively supporting technology commercialization and entrepreneurship throughout the Capital Region. Over a six-year tenure at UC Davis, she participated in technology transfer licensing to new startups and was involved with UC Davis Connect and the Innovation Access Network, programs that support campus-originated startups.

In November 2009, Arnold became CEO of the Sacramento Area Regional Technology Alliance, a nonprofit dedicated to accelerating the growth and development of the region’s technology sector.

This month, SARTA hosts the 6th Annual Clean Start Showcase at Sacramento State. Since 2005, Clean Start has been stimulating the development and success of early-stage, clean technology companies and helping to build a regional clean tech sector. Comstock’s recently sat down with Arnold to gain insight on the state of the region’s clean energy efforts.

Comstock’s: What’s the overall state of venture capital funding for clean technology?
Meg Arnold: The venture sector is going through significant changes in its own world in terms of what investors are interested in and the levels of risk they’re willing to assume. Globally, there’s been lots of consolidation, the overall size of the fund is larger and the number of venture funds is diminishing. One of the side effects of this is that it becomes more difficult to do smaller deals.

Comstock’s: How does this affect clean technology companies in our region?
Arnold: Early-stage companies, which are the majority of the local green-tech companies, need about $1 million for their first round of funding. There are fewer active VCs they can approach. It’s resulting in an increasing gap for that amount of funding, and companies with smaller funding needs are finding it hard to get through.

Comstock’s: So, what are their options?
Arnold: They first go to angel investors, high net-worth individuals investing in very early stage companies, often a group of them investing together. Over the last year, a new class of angel investor has emerged to fill the funding gap for startup companies. They invest larger amounts than typical angel investors; they’re called super angels. There are three channels we see Sacramento area companies going to: grants from the federal government, which are not huge dollar amounts; locally based, small venture funds; and bootstrapping. If you have a product you can get to market, try selling it, and then customers will help create a cash flow.

Comstock’s: What about clean energy funding, specifically?
Arnold: Globally, we’ve seen just over $1.5 billion in funding in the clean tech industry in the second quarter, a little down from $1.9 billion in the previous quarter. It’s also down from 2011, but down from historic highs. In our region, American River Ventures had a very strong clean energy and energy efficiency investing theme, and firms like Velocity Venture Capital are very focused on investing locally.

Comstock’s: What are some of the important clean energy sectors in the region?
Arnold: Energy efficiency products and solar panels. The Energy Efficiency Center at UC Davis and the Smart Grid Center at Sac State are well-recognized centers of research into the management of power. Tools related to managing power have significant potential in the clean power spaces, partly because they are software driven, so they can be taken to market on a quick timeframe and require fairly low capital up front.

Comstock’s: What will the scenario be for clean energy funding in the near future?
Arnold: I think it remains challenging to find and close venture money. As always, deals are chasing a limited pool of investors. But at the same time, companies in this region are finding work-around ways to achieve funding. One of the characteristics of the clean tech market is its reliance on government policy. The election in the fall and the politics surrounding that is adding uncertainty to the market. The new administration will need to modify or confirm energy policy, and that will bring clarity to the market. As the economy continues to recover, there’s been good news on jobs both nationally and in the Sacramento region, which will bring a greater level of activity in the venture market and have a flow-through effect to our region.

Globally, we’ve seen just over $1.5 billion in funding in the clean tech industry in the second quarter, a little down from $1.9 billion in the previous quarter.

— Meg Arnold, CEO of the Sacramento Area Regional Technology Alliance

Comstock’s: Could clean energy become an economic driver for the Capital Region?

Arnold: Growth of tech companies is critical to our economic future because it helps to diversify our job base. Thirty percent of the region’s jobs are in government, and for a healthy economy, that number needs to come down, which means other numbers need to grow. For many clean energy companies, their customers are not in this region, so when selling, they’re bringing in money from outside the region and creating wealth.

Comstock’s: Where do you see the region’s clean energy industry in the future?
Arnold: There are about 100 companies in the clean tech sector in the Sacramento region. There are about 450 tech companies now. In five years, I envision 600 tech companies operating, many of them in clean tech.

Did you know?

California stands to gain nearly 21,000 jobs from 16 clean-energy projects announced just in the second quarter of this year, according to a report from Environmental Entrepreneurs, a national group of policy and business leaders. Nationwide, more than 70 major clean energy projects were announced in Q2.