Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com. Its now time for the Aflac BusinessMakers Flashback brought to you by Aflac, ask about it at work. And for this mornings flashback we are going to roll back to September of last year where I got to sit down with Nancy Floyd, the managing director of San Fransico's venture capitalist firm Nth Power. Nancy is a true pioneer in the area of green energy. Check this out. Nancy, welcome to The Business Makers show.

Nancy: Russ, it's really a pleasure to be here.

Russ: Why don't we start by you just telling us about Nth Power?

Nancy: Nth Power was one of the very first venture capital firms to specialize in green technologies.  And I can tell you when I started the firm in 1993, there were zero venture capital dollars going into clean energy startups.  And in fact, we didn't make our first investment until 1997.  And so you're going to ask me, were there no deals between 1993 and 1997? 

Russ: Were there not any good deals?

Nancy: There were lots of good deals.  It just took three and a half years to raise $65 million. And today we have over $400 million under management, and it's not quite the missionary sell that it was back in 1993, '94.

Russ: Well, I got to tell you, 1993, that now-

Nancy: Yes, it dates me.

Russ: -it's 15 years ago.  No, that's not what I mean.  I mean, 15 years ago people did not talk about their carbon footprint.  They didn't talk about global warming nearly as much.  What motivated you to do this?

Nancy: I had previously started a company for Pacific Telesis, one of the regional Bell operating companies, at the time of deregulation.  And I saw the role that technology played in disrupting a deregulating industry, and the handwriting was on the wall that the electric utility industry-and that's really where we were focused initially-was going to go through deregulation.  It already happened in other parts of the world.  And so I saw a great opportunity and prior to the Pacific Telesis timeframe, I actually was one of the very first wind developers in the early ‘80s.  Certainly, again, well ahead of my time.  We were out, a handful of us, really creating the business mode, and I developed $35 million worth of wind farms in Northern California, which was huge.

Russ: In what year?  What year was it?

Nancy: Nineteen eighty-two and 1983.  And I sold the business in late '84.

Russ: The wind energy business?

Nancy: Uh-hunh (affirmative), yeah.

Russ: And sold it successfully for a good return?

Nancy: Twenty-five x return on the capital invested.

Russ: Wow, it's hard for me to fathom that forward thinking idea back at that period of time.  I mean, you were truly a pioneer.  Did that mean that you've struggled a lot more than you do these days?

Nancy: Yes, I, I would say I struggled certainly in the wind business initially, really trying to understand what the business model was and, specifically, trying to be one of the very first people to negotiate a long-term contract with a utility in Northern California, PG&E.  But I think I actually struggled more in 1993 and 1994 in trying to raise that first venture capital fund.

Russ: Okay, and golly you have to feel like it's prime time now.  Do you?

Nancy: I do.  I do, there are not hundreds of venture capital firms that are investing in this sector.  But we're firmly early stage investors.  A lot of these venture capital firms are later stage investors.  They have big funds.  And so because of our track record and our brand equity, I love the collegiality of it, the competition of it, because early on, frankly, one of the biggest challenges we faced when we started investing, was finding anybody to co-invest with us.

Russ: Right, and I'm sure these larger firms now, I mean, you really want to network with them, so that once one of your baby companies grows up, they can carry it to the next stage.

Nancy: Yeah, in fact, again, or early on, we made it our goal to go out and meet one new venture capital firm every couple of business days, so that we could begin to network.  And now, of course, many of them are seeking us out.

Russ: Now, I know this is like asking you which of your children is your favorite child, but if you look at your portfolio these days, and I asked you to pick a favorite-well, now, I'll let you go two or three maybe-describe what companies that would be.

Nancy: Well, we first, I guess, I'm going to go to what are really key paying points.  We have an investment in an advanced lithium ion battery company.  And of course, energy storage, whoever cracks that nut is going to make a fortune.  And we happen to think that they have some very distinct advantages, and of course, if there's going to be proliferation of plug and hybrid electric vehicles, which I believe there will be, you have to have the batteries.  So that's one.  Two, and it's not as much.  It will surprise you.  It's not as much around technology as it is around really building out the infrastructure.  Again, this is going to be required for clean transportation.  We have an investment in a company that is actually building clean fueling stations that can dispense ethanol, biodiesel, and electricity.  And they're not greenfield sites.  They're actually working in conjunction with, and taking little bit of real estate at traditional gas stations.  So to me that's very interesting because it's not a really traditional venture play.  We'll see where that goes.

Russ: What's the name of that company?

Nancy: It's called Propel Biofuels.

Russ: Okay.  You know, when you were talking about the battery, you talked about somebody comes along and really cracks that nut.  Do you think that there actually could be a huge leap forward, or is it just going to be iterative, small steps?

Nancy: Oh, yes.  I don't think it's going to be iterative small steps.  In fact, what I spoke about today, was the fact that in spite of the announcements that have been made by GM and Chrysler, there are literally over 100 startup companies that are manufacturing electric vehicles, alternative vehicles, and many of these people are actually veterans of Detroit.  And they are banking on the fact that Detroit will not get there, and some of them are literally, you know, taking a blank sheet of paper and designing new vehicles from the ground up, and others are doing components like Li-Ion, or this Lithium ion battery company.

Russ: Okay, that's cool.  When you look at the energy challenge of the future, you know, I always sort of look at innovation in two categories.  They are the innovators, the entrepreneurs, the startup people, that you probably really pay attention to, but also some of the giants and not just the oil companies but GE and those people.  At the end of the day, who would you bet on to really come forward and change the world?

Nancy: Well, we partner with GE, and the major utilities, and ABB, and the oil companies, and some of them actually happen to be investors.  But if I'm going to answer your question directly, I think the future is not with the incumbents.  I think that the future is with these entrepreneurs who are developing these technologies that are literally going to disrupt the global energy landscape.

Russ: Okay and that wraps up my discussion with Nancy Floyd, the managing director for Nth Power. And that wraps up the Aflac BusinessMakers Flashback, brought to you by Aflac, ask about it at work. And now its time for another survivor tip, so lets welcome Don Minnick.

[Survivor Tip]

Russ: You're listening to the Business Makers Show heard here and online at thebusinessmakers.com. Stay tuned in for a discussion with Susan Wood and Rob Toker of Sindicatum Carbon Capital America.