Gary D. Vollen is a managing director and head of clean technology investment banking group in San Francisco. A veteran “green” banker, Vollen began working with cleantech companies in the late ’90s, when smartgrid technology was still a few years away from its big coming out and the industry was still called “energy technology.”
Green Energy Reporter: Why and how did you begin working with cleantech companies?
Gary Vollen: About 15 years ago, I was working at Hambrecht & Quist. At the time the Internet bubble was at its peak, actually close to bursting. Parallel to that rush to the Web, there was also growing interest by investors in the telecom sector, mostly driven by the idea of convergence — a reality now — or the ability to pipe voice and other data streams into a single network. The changes in the telecom industry motivated me to look for other older industries that like telecom were also supported by an incoming wave of technological innovation. Cleantech — or energy technology as the space was called then — fit the bill. At the time we were still a few years away from the green energy boom, but I grew convinced that because of factors like rising energy consumption and climate change, energy technology, like telecom, would also experience significant growth over the mid-to-long term.
G.E.R.: The cleantech sector is notoriously capital hungry. Has this need for financing benefited Baird’s cleantech practice?
GV: From our base in San Francisco and inline with Baird’s middle-market focus, we assist small and mid-size companies raise capital via IPOs, private placements or mergers. Surprisingly, 2010 was actually relatively slow. We did secure a number of underwriting mandates, but the overall deal flow was slower than we’d anticipated, given the amount of government money that’s been flowing into the industry. I think cleantech companies that might have turned to banks or other private funders to secure capital instead opted to secure some of the DOE grants made available by the Obama administration. There were some headline-grabbing deals last year, like the Tesla IPO. However, the small-to-mid size companies populating our bracket largely stayed on the sidelines last year. We are seeing some positive indications in the first few months of this year, for example we recently advised Summit Energy as part of its $268 million sale to Schneider Electric.
G.E.R.: A growing number of large investment banks have launched dedicated cleantech and renewable energy groups. How do you compete with these bigger players?
GV: As I mentioned before, our focus as a bank has always been advising middle-market companies. It’s a market we know well and we’ve built a strong reputation as the sector’s go-to investment bank. We will leave the “Morgans” or “Goldmans” to handle big companies and continue to focus on our core expertise. I would also add that unlike bulge bracket firms, which often use their lending capabilities to build business relationships with larger companies, we focus on emerging growth companies where lending capabilities from us is less of an issue.
G.E.R.: In his State of the Union back in January, President Obama laid out an ambitious clean energy plan. Could this be the rough draft of a long-term energy policy?
GV: Right now, cleantech and renewable energy companies need continued government support. The stimulus-funded programs, which President Obama recently extended, helped accelerate and grow private investments into the sector. The ongoing issue with American energy policy is that it does not have, or at the very best, it’s never been a sustained, long-term effort. There’s been some improvement over the past couple of years. We’ve more proactively funded the green energy industry, but we are still far from having the sort of long-term incentives and market stability European or Asian markets have because of their long-term energy policies.
G.E.R.: Do you expect your group to be busy this year compared to 2010?
GV: Cleantech companies remain capital hungry. Last year’s slim IPO cycle helped create a pent up supply of cleantech companies that are now ready to go public like Solazyme, which recently filed a $100 million IPO. I think this year we’re looking at potentially 10-to15 IPOs, each raising roughly about $100-to-$150 million.
Photo: Robert W. Baird & Co.