Element 8 Member & Board Member
Indow Board Observer
What drove you to invest in Indow?
A couple years ago, several Element 8 members traveled to Portland on an Element 8 field trip to meet with a number of companies and other investors interested in early stage clean tech. On the second day, we visited the Indow offices and manufacturing facility and were very impressed with the team’s commitment to building a sustainable business and with the efficiency of their manufacturing operations. The product was clearly developed to meet a definite market need, not a solution looking for a problem. On the train back to Seattle from Portland, a number of Element 8 members were very excited about the company’s prospects and began an accelerated DD process to invest in its series A round.
What excited you about this opportunity and provided you the confidence to invest in the company multiple times?
Currently, Element 8 investors are considering another possible investment in the company. The most encouraging thing about the opportunity is the strength of the technology– it is a simple solution that elegantly solves a real customer problem. Besides the primary advantage of reduced energy consumption with a clear ROI for customers, the windows offer other benefits, such as noise reduction. Indow’s easy and accurate measurement system facilitates the entire fit and installation process for dealers and customers looking for custom size inserts. Having been a Board Observer since I first invested, I am familiar with the Company’s financials, progress and challenges, and continue to be impressed by the efficiency of their operations and ability to react to changes in the business environment. Indow, with its proven leadership, has continued to demonstrate strong market traction by increasing its customer base, bringing on new dealer partners, and working to make their dealers more productive.
In what ways does Indow’s business align with Element 8’s mission and investment goals?
Their core business aligns very well with Element 8. Indow is focused on sustainability, both from the perspective of a portfolio company’s product line as well as its operations. Their product helps reduce energy intensity for older buildings and homes by providing better insulation – an issue at the core of energy efficiency. Of course, Element 8 members are making investments, not charitable donations – the businesses we invest in must be profitable or are expected to become profitable within a reasonable timeframe. Because Indow is addressing a sufficiently large market, they’ve been able to deliver growth and I’d expect to see positive cash flows from the company in short order. Down the road, I am quite confident we will see a profitable exit for Element 8 and other Indow investors.
What has allowed Indow to succeed throughout the years?
Indow’s success has been driven by a solid product, a dedicated team and sizable market opportunity. Despite this recipe for success, the company did meet unexpected challenges early on that resulted in a lower revenue ramp than was initially projected. To the team’s credit, they met these challenges head on and were able to overcome them without losing confidence or focus, and maintained honest and consistent communications with their board members and investors. Now on a sustainable growth path, the Company’s continued success will be dependent on having a loyal group of investors to fund their growth – both institutional and angels.
How do you see the market for clean tech investment evolving in the next 3 years?
I certainly don’t claim to have crystal ball, but I do know that several of the significant challenges clean tech companies face today – relative to other companies – will remain. Cleantech companies particularly in the energy-related application areas tend to be capital intensive and have long development cycles. Certain sectors that are highly dependent on government subsidies or mandates and are subject to regulatory oversight, factors which are viewed as negative by many investors. We expect the price of oil will rebound and the concern over the relative cost of renewable energy versus traditional fossil fuel sources will become less pronounced. Segments of clean tech that I believe will see significant growth and increased investor interest include water processing technology, sustainable building materials, energy storage and agricultural tech. To a greater extent, I think we will see participation by strategic investors that is captive venture capital arms of industrial companies, supplementing institutional venture capital participation.
What was the most valuable piece of advice you’ve ever received as an entrepreneur or investor?
It’s difficult to pick a single piece of advice. As many recognize, it advisable to focus your private equity and venture investments in familiar areas where you have value-added and unique knowledge to determine the risks and prospects for success. Another important lesson is to recognize the cyclical nature of investment themes and valuations in regards to angel portfolio diversification. As such, it is advisable to develop one’s portfolio over time. This for me was a particularly painful lesson, having in retrospect been too active in my investments in the 1999-2000 timeframe.
Are you reading any good books right now?
I wish I had more time for pleasure reading. Two interesting books I read recently were Boys in the Boat, about the UW Olymic crew team, and City of Thieves, a story taking place during the siege of Leningrad during WW2.
I am currently reading Evolving Ourselves by the futurist Juan Enriquez. It’s an engaging discussion of the human evolution processes and genomics, exploring technology trends and environmental factors affecting the way humans evolve. The author was in Seattle a couple months ago and gave a fascinating informal talk.