LA’s cleantech industry looks to the future

How is President Trump's embrace of dirty fuels affecting companies in Los Angeles that are creating the products for a clean energy future? And how can they stay optimistic?

Since entering office, President Donald J. Trump has said he wants to roll back the Obama administration’s Clean Power Plan, which is meant to reduce carbon pollution from power plants; CAFE fuel-economy standards, meant to reduce CO2 emissions from cars and trucks; and the popular Energy Star labeling program.

So how is this affecting companies here in LA that are creating the products for a clean energy future? And how can they stay optimistic?

“The real action is taking place at the local and regional level, or you could even say the state level,” said Michael Swords, vice president of government relations at the Los Angeles Cleantech Incubator. This is a hub for startups in downtown LA’s Arts District (designed by John Friedman Alice Kimm architects). He helmed a leadership council meeting last week, where one speaker after another sounded upbeat.

The chemistry lab at LACI

“What cities are going to do over the next 10, 20, 30 years is really going to be significantly more important than anything the national government is going to do. You look at cities like New York, Los Angeles and Chicago, and they’re implementing policies that are driving sustainability, implementing new programs that are helping support entrepreneurs,” Swords said. “So we’re all very bullish about what’s going to happen over the next five to 10 years. And I would say the number one reason that’s going to drive all of this is cost. The price of renewable energy continues to drop significantly. The cost of battery storage continues to drop significantly. The cost of electric vehicles is dropping.”

But cost is only part of the picture. If regulations mandating clean energy and low waste are rolled back, wouldn’t that make it harder for the company that makes the low-energy light bulb or the plant-based utensils?

“Well, I think that local regulations and state regulations are going to have a significantly bigger impact on some of these technologies and their growth and adoption here in the Southland, and then hopefully we can start to export some of those products to other countries,” Swords said.

Meanwhile, other countries are moving forward on cleantech ventures. The Chinese plan to invest $360 billion in renewable energy by 2020, creating 13 million jobs. So how do we stay competitive globally?

“I remember a few years ago the former Secretary of Energy Stephen Chu saying that either we are going to do this, or it’s going to be done to us,” Swords said. The best we can do is create companies that are going to develop products and services that we can sell into those markets.”

Fred Walti, co-founder and CEO of LACI

The LA Cleantech Incubator was founded in 2011 with support from the City of LA, the LA Department of Water and Power and the former Community Redevelopment Agency.

DnA wanted to know more about what exactly LACI does. So we went on a tour of the new La Kretz Innovation Campus, a 60,000-square-foot facility in downtown LA’s Arts District. Our guide was Fred Walti, co-founder and outgoing CEO of LACI.

“An incubator is really the business equivalent of a baseball farm system,” Walti explained. “We’re supposed to go out and find young talented companies, teach them how to play ball, get them in the marketplace. How we do that is we provide them with really cheap space. We provide them with lots of coaching by people who’ve actually built companies. And we connect them to people that help: investors, customers, team members, partners, government entities.”

The La Kretz Innovation Campus is split into two parts. One part houses companies and partners, with an amphitheater with bleacher seating that hosts daily events, and a series of cubicles, open offices and meeting rooms. There are at least sixty clean tech companies headquartered at LACI, with more being added. Fred Walti said LACI is different from other tech startup incubators.

“For any entrepreneur, the challenge is to get out, to create a product or service that meet a well defined consumer or customer need. It’s very difficult in the cleantech space because, unlike an iPhone app where you can just put it out and you can see very quickly whether it’s going to generate revenue, in our world you have to sometimes do pilot demonstrations of our technology with companies like the Los Angeles Department of Water and Power and other large companies. So it’s a little bit more difficult to get our products and technologies to market. It takes a little bit longer.”

There’s also a research and development area with a chemistry lab, training centers, and an advanced prototyping center where companies can create products and tinker with models until they’re ready to be manufactured.

Nick Wettels, cofounder and CEO/CTO of Perception Robotics.

One of these companies is Perception Robotics, founded by Nick Wettels while doing his post-doctoral research at the Jet Propulsion Laboratory in Pasadena.

“So our company is a robotics company that focuses on taking lessons from nature and applying those to robots that grip and grab things. So our two technologies: one is a pressure sensitive polymer called polyskin that we can cover a robot and effectors or arms to tell it if it’s bumped into something or how hard it’s grabbing something. The other is a gecko adhesive… designed for robots that are sticking to large flat surfaces, like fuselages or panes of glass,” Wettels said.

Perception Robotics is mainly funded by NASA and the National Science Foundation. So, why did he choose to come to LACI?

“The incubator is very helpful in that it provides a good support structure for a variety of things. So I have a PhD, and I know how to build things and conduct experiments. What I don’t know how to do is apply HR law, look at liability insurance policies, write sales agreements or those sorts of things. So the incubator has been very helpful with that regard.”

Jonathan Miller, co-founder and chief product officer at HIVE Lighting.

Another company at LACI is HIVE Lighting. Jonathan Miller is co-founder and chief product officer. Miller was a cinematographer, working in film and TV, and he was looking for an energy-efficient light source with a very high color quality, and found there weren’t many options available.

“We are a clean technology company but we’re also an entertainment company. Ao we really think of ourselves as clean technology meets Hollywood. And we found that was a perfect match for LACI. The incubator really focuses on bringing manufacturing and combining the core manufacturing base that’s here in Los Angeles with a lot of the thought leaders that are here in Los Angeles. And a primary example of that is of course the entertainment industry,” Miller said. “We have clients that you would associate more closely with tech companies like Google and Apple, also clients that you’d associate with the aerospace industry such as Boeing and Lockheed Martin, but then we also very traditional entertainment clients like Universal, Warner Brothers, NBC, ABC.”

Another company at LACI is Repurpose. This is a company that makes utensils out of corn, sugar cane, bamboo and recycled wood chips.

Lauren Gropper, founder and CEO of Repurpose.

“Repurpose makes nontoxic, plant-based, 100 percent compostable tableware and we sell to the consumer retail market,” said Lauren Gropper, founder and CEO.

“Repurpose had an office downtown but not in the incubator and it just seemed like a perfect fit. So we’ve been we’ve been here about three years and they were very instrumental for us. When we started we were a small little scrappy company and they really helped us to formulate our capital raising strategy and introduce us to some key investors and that really catapulted us to the next level.”

Gropper said Repurpose is now in over 4,000 stores in the U.S., including Safeway, Target and Whole Foods.

“So we’ve really crossed over from being a small niche player and now we are the number one natural brand in tableware… There have been a mountain of challenges. Each stage I think has a different set of challenges. But in the early days when we first joined LACI it was really a cash flow, how do we hold on to every penny because every penny is so important and how do we make the best use of our resources? Where do we spend and where do we hold back? Because we only have three more months left of funding. And so what are we going to do and how do we plan for the next round of funding? I mean that was just so crucial to survival. It was survival for so long. Now we’re in a much different phase. We’re expanding. We were a profitable business and so for us it’s about now, how do we innovate more?”

But is Gropper concerned that the hard-won shift in public acceptance of green — and sometimes costlier — products may now be reversed in a new political era?

The cafeteria at LACI

“I think we have seen in the last several years a greater openness and acceptance to our types of products, with buyers at retailers that we thought would not be as open to our type of product. There are retailers in rural Texas that are interested in our products. We didn’t think that was necessarily a fit for us but it is. And so I’m curious to see what kind of change will occur as a result of this administration. And if this tide of openness to new or innovative environmentally-focused products changes at all. Because there’s been such an increase in the market as a whole not just for our kind of products but in the natural and organic space in retail. It is the one area that is growing rapidly while the traditional products are static.”

It’s clear from talking to these small business leaders that they see a strong future for clean tech, despite the White House’s enthusiasm for fossil fuels. For the cleantech industry, says Fred Walti, it’s all about business.

“I view it as really not a Republican or a Democratic issue. This is business. Clean technologies have been the fastest growing business sectors on earth for the last five years. And in fact the market for clean technologies is growing faster in developing and emerging countries, than it is in the U.S. For example, the U.S.’s consumption of energy for the last decade has been about level. Maybe it’s decreased a little bit. That’s not the case in India or China or in sub-Saharan Africa where the middle class is being built, and their need for energy and everything to do with natural resources is growing greatly. So there’s going to be a huge market, continue to be a huge market, for cleantech products. And so I’m still very optimistic.”