Current: Clean technology commercialization, particularly water tech, can take much longer than other sectors. What can banks like Wells Fargo do to enable the most promising innovations to get to market and succeed?
Matt Servatius: As a bank, Wells Fargo can be a part of every life stage of a clean technology company. While we are the bank of choice to many companies in the water technology sector, we also make direct equity investments and provide debt financing to help companies toward that next stage of their development. But as a bank, we are also invested in our customer relationships for the long run. Therefore, we can help expose and connect the end-market water users to technology solutions that are available and complementary. We do that through our own relationships across the sector and through partnerships with Current. Additionally, we endeavor to bring our entrepreneurs line of sight to the various forms of capital available to them as they commercialize and scale, so they can focus less on capital raising and more on running their business.
Current: Intelligent infrastructure technologies are changing how businesses and utilities monitor and manage water. What is your outlook on such technologies and how can they complement your other cleantech or AgTech investments?
MS: Advancements of these technologies are making items like sensors very affordable, so they can be easily and rapidly deployed. The banking industry sees this trend accelerating. Such technologies then enable more data aimed at the right points in the system or infrastructure to gather the most impactful and actionable data. Technology companies can then develop the most effective solutions to address the needs of the sector.
To overcome the fragmentation challenge in water and agriculture, these companies need to make this data publicly available, with anonymity of course, to arm the entrepreneurs with the right tools so they bring solutions that solve the most pressing problems the industry is experiencing. It also should reduce the amount or timeframe of pilots. All too often, companies develop a great technology and then go try and find the problem in a vacuum. This is a ubiquitous challenge across ag, food, water and energy sectors. The other part of the challenge is communicating the data. The water and agricultural technology industry should move to a standard of communication protocols – a similar path the telecom industry had to embrace, which was a major driver of smart phone penetration.
Current: The “valley of death” — the period before a company starts generating positive cashflow — is a well-known challenge facing cleantech startups, particularly in the water sector. How is Wells Fargo’s Cleantech Banking team working to overcome this issue, and how can an innovation platform like Current help innovators and investors bridge this gap?
MS: It’s a real challenge, but the hardest ones are typically the most worthwhile. What differentiates Wells Fargo from our competitors is that we have programs and teams dedicated to supporting entrepreneurs from incubation to a large public company. For example, in 2014, we started our Innovation Incubator (IN2) in partnership with NREL, with $30 million from Wells Fargo’s Foundation. It provides non-dilutive grant financing, technical resources for technology validation and hopefully a pilot opportunity within our own corporate facilities. The focus for the first four years has been on building energy and water efficiency and is now looking to expand into the digitization of food and agriculture systems. Like IN2, Current can play a role when it comes to de-risking the technology to companies as they move towards bankability in terms of access to financing.
Current: With Wells Fargo’s recent commitment of $200 billion to finance clean technology and renewable energy projects, how does water tech fit into the bank’s investment strategy? With this scale of investment, what criteria are most important to Wells Fargo in identifying investable water tech companies and what does success look like once all capital is deployed?
Watertech fits right within the objectives of our sustainable finance commitment. We want to help mobilize more capital into food, energy, water and transportation and lead the transition these industries are undergoing in various stages to move from an analog world to a digital one. In turn, we’ll get smarter and more sustainable systems.
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