Ramping up efforts to address climate change, California spearheads the growth of the clean energy industry with the goal to reach 100% renewable energy by 2045. This is affecting the business climate as well. As reported by E2, there are over half a million clean energy employees in the state. That is 1 in 7 of the total in the country.
We wanted to know more about California’s green development and its opportunities and therefore we sat down with our experts Kalle Marsal and Ernesto Estacio. In this article, they share their views on the cleantech landscape and their thoughts on why European companies should look further away than their next-door neighbor.
“While the US on a national level lags behind in recognizing and addressing climate change, it is changing, especially in California and the Northeast. Therefore, there is an opening to bring in businesses that have innovative and green technologies.” – Kalle Marsal
Being a tech-centered state, it is no surprise that green technology would advance here in California as well. However, Europe has led the way in this area for several years, resulting in many innovative products and solutions already being implemented. The 2018 Global Green Economy Index ranked the Nordic countries together with Switzerland and Germany the top 7 whilst the United States is on 31st place. This implies that there could be untapped opportunities for European companies to enter the emerging green market in the U.S. - with an emphasis on emerging. The investments in the world on clean technology are back on track after the slump in 2012-2014. According to figures from the consultancy firm Frost & Sullivan, the national clean technology market will expand to $1.3 trillion by 2020.
Ernesto Estacio explains that there are many reasons to start a cleantech business in California. Not only is the market more mature for green solutions, but there is also currently a good climate for investments as well as grants and incentives. A lot has happened since the slump in 2012-2013.
“The renewable energy business is well supported here in California, much more than in other states. There are incentives on both on a federal and a state-level which is unique.” – Ernesto Estacio
So why are not European cleantech companies rushing over here? In general, they do not have visibility to the opportunities that actually exist, which is difficult since they are thousands of miles away. According to our experts, there are also some misconceptions about expanding to the U.S. that are holding them back. They explain how some great opportunities are overlooked. “It’s easy to assume that since these opportunities are so far away, it will be a massive distraction and require massive funding to pursue them, almost betting the whole company’s future. Therefore, they aim to first expand in Europe instead. However, by the time they have grown in several countries in Europe the opportunity here may be gone.” - Kalle Marsal Unlike Europe, the U.S. is generally one large cohesive market. Regulations and culture do vary between different states, but they do not differ as much as the European countries do. The U.S. consists of 327 million people and it is the biggest economy in the world! So how does one get their business going here and most importantly, how to start? If you have not picked up the hint yet – the answer is California. Not only are there a number of grants and incentives available in cleantech, California also has its own strong market. It is the 5th largest in the world (it has even surpassed the UK), making the state a good place to start with plenty of opportunities. However, there are also some tough regulations and standards to follow. Although, according to our experts, that does not have to limit your business. Because if you meet the Californian standards, which are very high within cleantech, the other states will be easy to pursue. It will make the expansion to the rest of the country much smoother. Many who do take the leap across the Atlantic do so by themselves. It is not uncommon that they have one or two representatives visit the U.S. and partner up with whomever they happen to meet rather than someone who would be the right fit for their organization. Not having a local network and not being available on-site is a big obstacle. At the same time, sending someone over to operate the business is a big investment and it’s hard to find someone who can do so properly, making the leap a big distraction for everyone.
“We can help them enter much earlier than they assume, with much lower risk and to enter it in a way tailored specifically to their circumstances.” - Kalle Marsal
Our experts explain how the distraction to the business in your home base can be minimized through working together with a partner such as GoToMarketUSA to be the local presence and operating your U.S. entity. An expansion will still require your attention and commitment, but this alternative allows you to focus on your business back at home while the locally situated representatives drive the expansion day-to-day. Utilizing these representatives, who are already on-site, will cost far less and be done much faster. Regarding the funding, there are many opportunities in California for economically viable projects. There are many grants and initiatives for clean technologies and a mature investor climate. If you can navigate through them (or know someone who can) many doors will open. Which, again you can access through a partner over here. Both Ernesto and Kalle meet many cleantech companies that are interested in the U.S. and they would like to encourage them to open their eyes towards the possibilities here. California is going green, and European companies are missing out, so get moving! For more information about GoToMarketUSA contact us at bjorn@gotomarketusa.com
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Kalle Marsal
Cleantech Business Building Manager at GoToMarketUSA. Kalle is a senior executive with 20+ years experience building, leading, and funding high-performing teams across commercial and impact markets, both in mid- and large-sized companies. He has also helped venture capital and private equity communities with developing their portfolios. Kalle has a Stanford MBA with Distinction, and a Stanford BS & MS, respectively, in Industrial Engineering.
Ernesto Estacio
Private Consultant and Special Infrastructure Industry Expert. Ernesto has 30+ years of experience in corporate management and project development arranging funding for projects. He has worked for agencies and banks in the U.S. and spent several years working in Asian countries such as China and Vietnam. He performs visibility studies and secures debt financing from international funding institutions, including tax-free bond financing from the State of California.