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Home WELCOME: Andre Shortell

Welcome - Andre Shortell

A very warm welcome to “Cleantech Connect 2012”. This is our fourth year running and as ever we have a terrific line up of entrants and winners that span the many Cleantech sectors. This year we have more entrants from more sectors and with more mature businesses than ever before.

Cleantech Connect really is the annual gathering of the CEOs of the fastest and most respected companies in the sector and we are honoured to have the top 40 with us tonight. You all are indeed the cream of the industry! We are here to congratulate all of you and share in the celebration of the winners as well as spend some fun time strengthening our bonds, and no doubt doing a few deals over dinner.

Competition has been intense this year. We are of course delighted as this demonstrates to us the mounting strength of the top quartile. This is despite some headline failures and difficult market conditions generally. We have strengthened the judging panel and are delighted to welcome our new Judges.

We are also delighted to welcome back our very select group of sponsors: Berenberg Bank, Europe’s second oldest private bank (because entrepreneurs like you will need help keeping the fortune you make), Morrison & Foerster or MoFo, a legal adviser with global reach (you will certainly need help there), Barclays the UK’s leading privately held bank (who can help you when you become really big and does things we don’t do, yet), the Miles Partnership (you will always need help on executive talent) and of course, the Carbon Trust. Thank you all.

How have our companies performed?

As in previous years, we have ranked the fastest growing larger and smaller companies by growth rate according to their audited financial results for the last three years. The compound annual growth rates have been tremendous, averaging a whopping 130% for the larger companies and 66% for the younger ones. In investor speak, this means that the leading group of larger companies had a top line growth of 5.3 times between 2009 and 2011 while the younger companies exceeded a remarkable 2.8 times – no small feat in any industry!

We have also selected from this group those that stood out in terms of innovation, global potential and sheer appeal to the judges in the Judges Award as well as our “One to Watch” of the Year for those emerging and promising companies that don’t yet have three years of financials.

Where is the Cleantech industry heading?

For a start, it is getting more names: Green Tech, Blue Tech, Resource Management, Sustainability etc. The industry is becoming less standalone and is being incorporated into main line industry as strategic players become more involved and make it part of their normal course of business. There is also a marked shift towards capital being more available for later stage and profitable companies making it harder for start ups. Investors are also picking their verticals more deliberately and starting to track and hunt their favorite companies.

To be successful, technologies can’t just be green. This is starting to become clear as we enter our second decade as an industry. Technologies need to function better, cost less and have a mass adoption potential. This is even more obvious as we see the middle classes of the developing countries effectively triple the market potential, but certainly at a new price level. This will mainly be seen in sectors like the Connected Home, Lighting or Electric Vehicles. For instance, to be widely adopted, the EV will need to be as easy to use and cost efficient as the iPod was over the Walkman.

Another prediction we are making is that we expect to see a significant pick up in M&A in the next 24 months. Of the over 900 European companies in the sector, less than 10% have exited. According to a Cleantech Group paper “Something has to give. Soon”, 230 companies in Europe received approximately $9 billion over the last ten years with about half that in the period before 2006. Exits between 2008 and 2011 were about one a month and we think this will pick up to about three a month as the companies in the VC portfolios continue to mature and become strategically attractive. The pressure to exit will be brought on by LPs looking for positive returns in the earlier funds as GPs market their second and third funds. The better companies, many of them represented here tonight will be a core group of those banner exits.

The exits will not come easily and will require a lot of patient planning and preparation of building the right team, forging strategic relationships with larger companies, growing operating margins and becoming the known-player in their segment. This period or the “Third Wave” as Richard Youngman from the Cleantech Group talks about in his article could also be the “clean-out” phase where we will see some big wins and some equally-big failures.

GP Bullhound is gearing up

In light of the increased need for funding and exits, we at GP Bullhound are gearing up. 2012 has been an important growth year for us. We expect a record year across all our sectors. We have acquired a leading advisory team in Berlin this year, and this in on the back of opening up our Stockholm office last year. In Cleantech, we have a record nine transactions in execution, each with what we believe to be a category leader. We have also significantly increased the depth of our Cleantech bench with the addition of David Raabe and Lily Xheka who both joined us from Citi, Mark Klimmek who came through the Pure Equity acquisition in Germany and Ravi Ghedia who joins today (literally) from BofA Merrill. We would like to think that the strongest Cleantech adviser just got stronger.

CEOs are the driving force

This year we wanted to celebrate the Entrepreneur/CEO. It is the Entrepreneur/CEO that drives companies to win and outperform. I do believe that among the many factors that contribute to a Company’s success or failure, really it comes down to the senior team. It is the CEO that has to sell to a VC, it is the CEO that closes those transformational deals, it is the CEO that builds and binds the team and it is with the CEO where the buck stops. It is the loneliest of jobs! When all the chips are down, it is the indefatigable CEO who will have to carry the day, often steering the company away from the precipice. These sometimes serial Entrepreneurs/CEOs thrive on the competitive spirit and are akin to Olympic athletes.

This year we have selected four very special and different CEOs that we believe bring those unique qualities to the companies they lead. As you will see in their interviews with Anne McIvor from Cleantech Investor, they bring that something “extra & special” that is required in business.

It is therefore fitting that with London 2012 Games we have here tonight the recently named “Olympian of the Year” by the Sunday Times and certainly one of the UK’s most popular gold medalists, Katherine Grainger, to share a few pointers on competing and winning.

Andre Shortell - Partner, GP Bullhound
 

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