Greentown Startups Work Around VCs, Find Niches in Cleantech

If you’re wondering what’s bubbling up in the fields of energy and sustainability, try visiting the incubator with the largest number of cleantech startups in the country.

That would be Greentown Labs, based in a 33,000-square-foot facility in Somerville, MA, between Union Square and Porter Square. The co-working space originally formed in late 2010 in Cambridge, MA, near the Galleria Mall, and moved to Boston’s Fort Point neighborhood in 2011. Last fall, Greentown resettled in its current digs, a manufacturing building previously occupied by Ames Safety Envelope.

The incubator officially opened in May 2011, and it celebrated its third birthday on Wednesday.

Greentown’s 40-odd startup residents span the fields of energy generation, distribution, and efficiency, as well as smart buildings, advanced materials, agriculture, water, and waste management. The facility converted from nonprofit to for-profit last year, and it gets about 80 percent of its money from the rent it charges its residents; the rest comes from corporate sponsors (15 percent) and city and state governments (5 percent).

The space has retained its original hardware focus—and its grassroots feel. Entrepreneurs sit in a large, open room and have access to a machine shop, electronics shop, prototyping equipment, and design software. They also have access to each other, of course: the network and community is one of Greentown’s main selling points.

Around Boston, there are well-established cleantech startups like Harvest Power, Next Step Living, and Digital Lumens. Yet for every Ambri (formerly called Liquid Metal Battery), which recently raised $35 million from the likes of Bill Gates and Khosla Ventures, there are many fledgling startups striving to find funding, customers, and the right market fit.

And that’s where Greentown’s impact lies. Indeed, early-stage companies are a key focus for the region, as many observers are wondering what’s next for green energy in Massachusetts after Gov. Deval Patrick steps down in 2015.

“Everybody thinks cleantech is down in the dumps, and it’s really not,” says Emily Reichert, Greentown’s CEO and executive director (pictured at top).

Reichert is an interesting mix of tech- and business-savvy. She did her PhD in physical chemistry at the University of Wisconsin-Madison and then spent six years at TIAX, the Boston-area technology development lab, which is where she first got into green chemistry. After a few years directing business operations at Warner Babcock Institute for Green Chemistry, she got an MBA at MIT Sloan School of Management, with a focus on entrepreneurship. She signed on with Greentown Labs in early 2013.

“I thought I’d hang out with Greentown, but I got more and more involved and fell in love with it,” Reichert says.

She says the space has been adding two or three startups a month since last fall. Some emerging themes: agriculture, energy efficiency, manufacturing, robotics, oil and gas partnerships, and slightly more consumer tech.

Greentown startups tend to be young, gritty, and low-capital. A couple of the founding members, Oscomp Systems and Promethean Power, outgrew the space and now have primary operations elsewhere. Others are still based at Greentown and have recently raised their profile—quite literally, in the case of Altaeros Energies, which makes a wind turbine designed to float 1,000 feet in the air.

But most of the startups remain under the radar, working on niche products. “There’s no company in here trying to create a solar cell that’s cheaper than coal,” says Adam Rein, an Altaeros co-founder and board member of Greentown. Instead of trying to “solve the energy crisis with one company,” he says, Greentown entrepreneurs are working on narrower problems and focusing on very specific customers and partners.

They are also working around traditional venture firms, which have left the early-stage energy investing scene in droves. “Venture capitalists are pulling away from cleantech, but corporate partners are moving closer,” Rein says.

Ian Bowles, a co-founder and managing director of Boston-based WindSail Capital Group, would agree with that assessment. “I tend to see the center of gravity for cleantech having shifted from new technologies toward deployment and installation,” he says.

Bowles, who was Massachusetts Secretary of Energy and Environmental Affairs from 2007 to 2011, made the transition to startup investing just as many VCs were getting out of energy. WindSail has backed local companies such as Next Step Living, XL Hybrids, and FastCAP Systems. Their common thread? “For us as a lender, we need at least initial revenue and early commercial sales in order to invest. Generally we won’t lend if there is technology risk,” Bowles says.

Greentown startups would probably debate how much technology risk they entail—but they are also proving themselves in the field. While a few companies like Altaeros and Oscomp are well on their way, others are blazing their own trails.

Dynamo micro-turbine (image: Dynamo Micropower)Dynamo Micropower, led by CEO Jason Ethier, is developing a new kind of micro-turbine (pictured) that can produce electricity for oil and gas applications. Its technology is designed to be smaller, cheaper, and lower-maintenance than other portable power sources. Dynamo has gotten money from grants, angel investors, cleantech competitions, and startup accelerators MassChallenge and Surge (in Houston). The startup has been working with pilot customers—focusing initially on shale wells—and seems to be on its way to deploying its product more widely.

Grove Labs is a young startup founded by MIT alums Jamie Byron and Gabe Blanchet. They are building technologies for urban farming: think Web-connected sensors and control systems for monitoring water, light, and other environmental conditions. (They were motivated by their experience running an aquaponic vegetable garden in their fraternity house.)

Grove Labs (image: JP Ruth, Xconomy)Grove just graduated from the R/GA connected devices accelerator in New York in March (see photo). It’s a little early to talk about customers and product strategy, but what’s interesting is that the technology and markets may have finally caught up to the old concept of wireless sensor networks for monitoring agriculture and other applications. Indeed, ag-tech is an emerging focus of companies at Greentown, and elsewhere.

Meanwhile, a startup called Loci Controls recently moved from the Boston hardware accelerator Bolt to Greentown. Led by MIT grads Andrew Campanella and Melinda Hale, Loci is developing hardware and software to make harvesting energy from landfill gas (methane) more efficient and automated. This is another example of wireless sensors and control software being applied to optimization problems in energy and the environment. The company recently raised $765,000 in seed funding from CommonAngels, Launch Capital, and other angel investors, and has been doing field testing around New England.

Perhaps Rob Day, a cleantech investor and partner with Black Coral Capital, sums up the state of these startups best.

“What makes Greentown Labs great is that they’re working together to be able to find low-capital-need pathways to commercialization, which means they don’t need those VC checks, at least at the early stage,” Day says. “Completely throws out the old ‘cleantech is always capital intensive’ canard.”

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One response to “Greentown Startups Work Around VCs, Find Niches in Cleantech”

  1. Jerry Jeff says:

    Sounds like a cool place, and I wish I’d made it to their open house this week. The focus on deployment and addressing tractable problems is both good and bad. It’s great to see some companies getting traction and solving problems in the real world. On the other hand, the *really big* problems aren’t going to solve themselves…