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Michael Melnick - CMEA Capital

Venture Capitalist specializing in clean technology.

Michael Melnick

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Russ visits with the brilliant Dr. Michael Melnick, a principal with venture capital firm CMEA Capital. The company specializes in clean technology energy such as biofuels and renewable chemicals. Dr Melnick discusses cutting-edge energy development and game-changing innovation within the battery, solar and nuclear arenas.

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Russ: This is the BusinessMakers Show heard hear and online at theBusinessMakers.com. It's guest time and I'm at Rice University for the eighth annual Energy and Clean Technology Conference. My guest today is Dr. Michael Melnick, partner with CMEA Capital. Michael, welcome to the BusinessMakers Show.

Michael: Good morning, Russ. Thanks for having me.

Russ: You bet. Well let's start here. Give us an overview of CMEA Capital.

Michael: CMEA was one of the first clean tech investment venture capital firms founded more than 20 years ago now. It's a spin off of NEA and CMEA is an acronym standing for Chemicals and Materials Enterprise Associates. It was founded with backing from material science companies like 3M and Dow Chemical to focus on material science innovation and how they could transform industries; in particular, energy.

Russ: Cool. Well how long have you been with CMEA Capital?

Michael: I've been there almost three years. I'm a member of the energy and materials group, our niche in the clean tech arena. We also have IT and life science groups there.

Russ: Well now I did a little research on your background and for me, being the non-scientist, it looked like it was really heavy towards the bio-tech sector.

Michael: Yes; I have a bio-tech background, a Ph.D. in genetics from Harvard. I was co-founder of a bio-technology company in the Boston area called Cell Signaling Technology that developed assays for drug discovery. So I'm new to the clean tech area, but CMEA is very visionary in terms of focus on what they call convergence opportunities. So exploiting synergies or overlaps between different areas of technology and that's particularly evident in energy in areas like bio-fuels and renewable chemicals that take advantage of energy experience and life science experience at CMEA.

Russ: So that's kind of interesting, but this sort of evolving into energy for you, was CMEA the first time that that happened for you?

Michael: It was. So they hired me to look at bio-fuels and renewable chemicals opportunities. So industrial micro-biology as opposed to drug discovery, but I also became involved in material science innovation more generally. In particular, an area that CMEA has pioneered called combinatorial discovery, which applies some of the lessons of high throughput drug discovery to the discovery of new materials. For example in solar or other areas.

Russ: Wow. That's real interesting. So here you are now kind of focused on this huge world challenge of energy and, man, it is breathtaking how challenging it is. I always like to ask people that are focused on these new alternative ways. What's your prediction of a potential game changer in energy in the next say ten years?

Michael: We really feel that a lot of the game changing innovations can come from material science, the angle that we're taking on clean tech and that in the past there's been a history of material science innovations enabling breakthroughs in energy generation starting with a steam engine which require metal, steel that could tolerate high pressures and temperatures down to silicon and its use in semi-conductors and solar or in LED lighting, for example. So we think there's a track record where materials innovations have proceeded is quantum leaps in new energy technology made those possible. The key is accelerating the time between the materials discovery and its application, its impact in industry and that's where we think we add value.

Russ: Do you actually see promising progress in that area right now?

Michael: Absolutely and almost unlimited potential in areas such as batteries. For example, we have numerous battery investments from late stage companies like A123 that develop lithium iron phosphate as new material for batteries to an early stage company; wildcat discovery that uses the high throughput approach I mentioned to develop new battery material.

Russ: Ya' know every time I read something as a layman, not a scientist, but about batteries, there's kind of excitement and I'm actually quite impressed with the way batteries work today, but I always read this challenging engineering phenomena that it's real hard to carry them to 100 percent or 200 percent increase in power and lifetime that it just seems like it's just barely inching up.

Michael: I think the field was inactive in terms of R&D for a long time and we've seen a real renaissance in battery research including new materials research, but new materials are not enough. It's really a system that requires innovation and engineering of the cells and the packs and management of the power, but we've seen at our companies dramatic improvements in battery performance.

Russ: And what does dramatic mean?

Michael: Thirty, 40 percent improvements in cycle life or power density, for example, as a result of the use of new materials.

Russ: That is impressive. Cool. Since you've been at CMEA Capital have you brought some of those companies in as portfolio companies?

Michael: In the battery space?

Russ: Yes.

Michael: Yes; we're investors. I mentioned that we had an exit with A123 which went public in the fall. We made investments in a materials companies that provide new electro-materials or battery additives and we continue to look. We see almost unlimited potential in the battery area that we were not capping our exposure to the battery _______.

Russ: Okay. Well the other critique I read about batteries sometimes is it still takes a coal powered power plant to actually charge the batteries.

Michael: It's true that plug-in electric vehicle field, those cars basically are running on coal, but we think one of the most promising areas in batteries is development of really large ones that can help store the power generator by solar and wind and distribute it evenly over the course of 24 hours, even though it's only generated during part of the day or part of the night.

Russ: Well that's interesting.

Michael: And we think that's a key innovation that will enable an even larger scale implementation of solar __________ --

Russ: Great. Well and before I let you go, tell me what else is exciting that you see that is outside the battery world providing energy solutions for the future.

Michael: CMEA has considered some areas that normal venture capital firms have not. For example, the nuclear space we're investors in a modular nuclear reactor company called New Scale that developed an innovative design, 40 megawatt design as opposed to the 1,000 megawatt plants that are better known that's more analogous to a gas turbine fired power plant and is much safer, could be built much cheaper --

Russ: Cool.

Michael: And we really consider nuclear as a new technology.

Russ: Boy, I do, too. I do, too. Michael, I really appreciate you giving us some of your time.

Michael: My pleasure. Thank you.

Russ: You bet. That's Dr. Michael Melnick, partner with CMEA Capital. This is the BusinessMakers Show heard here and seen online at theBusinessMakers.com.

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