Toronto-based venture capitalists Nicholas Parker and Kenneth Strong are building a bridge for North American clean-tech companies to make it big in China, a country desperate for solutions to pollution and greenhouse-gas emissions.
Pioneers in the financing clean-tech startups, Mr. Parker and Mr. Strong are now partnering with Yuhan Sun, one of China's top scientists and vice-president of the Shanghai Advanced Research Institute (SARI), in an organization that will build pilot projects and commercialize technology that captures and utilizes carbon dioxide emissions from coal-fired power plants and other industrial sources.
Their first commercialization project: U.S.-based Accelergy Corp. is working with Chinese partners to deploy its technology for using carbon dioxide to make bioproducts, including an algae-based fertilizer that, the company says, will dramatically cut CO2 emissions and restore distressed soil.
At the GLOBE sustainable business conference in Vancouver recently, the Canadian team and SARI launched the Shanghai-based Institute for Clean Technology, which will connect North American clean-tech companies with customers among China's biggest industrial firms, including state-owned coal utilities Shenhua Group and Lu'an Group and steelmaker Baosteel Group.
China represents the world's fastest-growing market for clean-tech industries, and provides an opportunity for startups to scale up commercial operations more quickly and cheaply than they can in North America, although entrepreneurs remain wary about the safety of their intellectual property.
Mr. Parker said the collaboration represents an opportunity for China to have access to solutions from the West and adapt them to its own needs, while the tech companies gain entry to the vast market.
"People are really bad at commercialization and they are particularly bad at it in China," he said.
The new clean-tech institute will leverage the scientific heft and reputation of the Chinese Academy of Sciences, with best practices from the venture-capital world, he said.
"We can accelerate not only the commercialization but the scaling up," he said. "In effect, China is the Wal-Mart of clean tech – you can do it cheaper."
Mr. Parker and Mr. Strong are partners in Global Acceleration Partners Inc., a recently formed company that is focused on clean-tech investment opportunities in China. The former has been working on environmental venture financing for the past two decades, and even claims credit for popularizing the term "clean tech." Mr. Strong is also a veteran financier and was business partner with his father, Maurice Strong, who was a leading environmentalist, business executive and diplomat before his death last year.
During their visit to the GLOBE conference, Mr. Parker and Mr. Sun met with federal Natural Resources Minister Jim Carr, who recently hosted Zhigang Wang, Chinese Vice-Minister of Science and Technology, and signed an agreement on bilateral clean-tech co-operation. The United States is also working with China on joint approaches, and U.S. Energy Secretary Ernest Moniz met Mr. Sun in Shanghai last week during a trip to China aimed at strengthening those ties.
Mr. Parker insisted that the concerns over intellectual property are overblown – that SARI is renown for its work with the U.S. Department of Energy labs and brings its own intellectual property to the table. China's anti-corruption efforts are aimed at rampant counterfeiting, among other crimes, he said. Still, he said potential partners need to be diligent and should work with their home governments to maximize their protection.
For his part, Mr. Sun has 40 patents of his own, and has worked internationally for years. He said the key to the new venture is the partnership with Chinese – and potentially international – industrial companies that will participate in pilot projects and deploy the technology once it proves commercially viable. "We want to focus on solutions, not just a single technology," he said.
Former Silicon Valley venture capitalist John Rockwell is now president of Accelergy, the Houston-based firm that is commercializing patents bought from ExxonMobil Corp. Accelergy's technology uses carbon dioxide as a feedstock for alga-based products including its TerraSync biofertilizer.
In an interview, Mr. Rockwell shrugged off concerns over intellectual property in China, saying SARI brought its own intellectual property to the project and together, the partners created additional patents as they reconfigured the technology. Under the deal, SARI will manage the commercialization in China, while Accelergy will lead the international effort, including planned production facilities in North America.