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newnet investor profile: Tom Blaisdell, DCM

DCM’s operations span from Silicon Valley to Beijing to Tokyo, generating a distinguished record of providing growth companies with capital and expertise across the cleantech space. Leveraging their unique knowledge to explore opportunities in the Technology, Media, Telecommunications and Cleantech sectors, DCM has delivered consistent, superior returns across all their target geographies over the past decade.

Tom Blaisdell focuses on software, technology-enabled services, media and cleantech at DCM. Previously, Blaisdell spent three years at two internet start-ups and six years at Intuit where he held a variety of marketing, business development and general management roles, including his last role as General Manager of the Business Products Group. Prior to Intuit, Blaisdell worked for Bain & Co. in San Francisco and Boston, and he put his mechanical engineering degree to work as an environmental engineer at Acurex in Mountain View, CA, where he worked on programmes evaluating alternative-fueled vehicle trials, including ethanol, methanol and compressed natural gas (CNG) cars and buses. Blaisdell holds a B.S. in Mechanical Engineering with distinction from Stanford University, as well as an M.B.A. with high distinction from the Amos Tuck School at Dartmouth College.

What does DCM focus on?

‘We are primarily a technology firm so we invest very broadly in the context of technology. When you think of ‘cleantech’ we are focused on the ‘tech’ part rather than the ‘clean’ part. There are various innovative financial schemes within cleantech but what we are interested in are disruptive, innovative technologies that create new compelling ROIs for customers. Whether we are doing that for an enterprise, a consumer or whether it is focused on cleantech, our aim remains very much the same.

When you look at cleantech and energy efficiency, the breadth of the market means it is a huge driver for new technology. We actually invest in both sides of the equation; demand reduction which encompasses energy efficiency and resource conservation, and supply increase which covers areas such as water disinfection or solar panel manufacturing.’

Where is your geographical focus?

‘We do not just focus on the US, as we are firm believers that all technology-driven opportunities need to be looked at in a global context. That said, we concentrate our direct investment efforts mainly on the US, China and Japan.’

Has the financial downturn affected the areas you invest in?

‘As a venture capitalist, we focus on early stage companies. Our typical profile is first institutional investment and because of the nature of our approach, our timeline for investments tends to be a five-seven year time horizon. This allows us to concentrate less on the current macro environment and more on long-term trends and drivers.

Given the current financial climate, I would say more mature companies are facing the biggest challenges because they are no longer in the R&D phase but are also not large enough to ensure a stable supply of revenue. Being caught in that adolescent stage means they have ramped up production so their burn rate is higher but demand is constipated due to the lack of credit in the market place. I think making investments into those companies right now would be the most challenging because there is such little visibility of what will occur over the next two to three quarters.’

Where do you expect to see a surge in opportunities looking ahead?

‘I think we are going to see the low-hanging fruit continue to be on the energy efficiency side and potentially on energy storage, battery technology and also on a larger magnitude, grid-scale storage. Europe has been very much the leader in many of these technologies and introduced government-backed incentives long before the US and other parts of the world. I do believe Europe will continue to be a major player, but with respect to future growth, I think that the stimulus dollars being put in place in the US as well as in Japan and China will accelerate growth in these areas. President Obama and the American Recovery and Reinvestment Act are going to provide a real boost to cleantech initiatives in the US.

The two things we will continue to look for are disruptive technologies and promising economics. We have a track record of finding exciting and innovative technologies that transform the economics within specific markets. We think there will be many such opportunities in the cleantech arena going forward.’

What challenges do you face investing in cleantech?

‘The challenges vary according to technology and geography, but generally speaking enterprises have been very quick to adopt technologies which have fast paybacks. With cleantech, you are often expanding your technology beyond enterprise customers to consumers and utilities and even on to government entities which tend to be much slower to adopt newer technologies. The stimulus package will help to offset that, but it will not be able to change the fact that it will remain a longer process for the technologies to become mainstream.’

What do you see as the benefits to this market?

‘There are huge secular demand drivers. The biggest driver we have seen is the expanding middle class in developing countries like China and India where you have hundreds of millions of people moving up the economic ladder who have increasing demands for commodities like energy and clean water as well as consumer products such as refrigerators and cars. The trick will be to provide them in an environmentally sustainable manner. That is where disruptive technologies can play a key role.’

Who will emerge as a cleantech leader?

‘Germany has certainly been the recent leader in solar and wind particularly, but we do see other people following in their footsteps, starting with the US which has been working on a state-by-state basis with renewable energy portfolios at present. If that can be adopted on a national level the US could be a massive driver in a very short space of time.’

Japan has a very long history of innovation in the cleantech space. Before Germany, they were certainly among the leaders in solar technology. They now have a renewed commitment in their stimulus package to clean technology, and solar in particular. Japan made a concerted push in energy efficiency a long time before the rest of the world did, so they are further down the curve than the rest of us. China continues to show huge growth potential and hence will attract interest and generate opportunities.’

What does the next decade hold for cleantech?

‘Over the next decade, as the ROIs become more clean-cut, we will see technology in this sector become more mainstream. Once you learn how to drive down the cost and the ROIs become more compelling, I think we will see an explosion in adoption which is why we are so excited.’

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