Cycle Capital may not be grabbing headlines every week, but this small investment firm focused on funding cleantech ventures has been quietly making an impact over the last few months.
While the company focuses on more mature-stage companies, it has invested in several Montreal startups. They include Green Mantra, Inocucor, Laboratoire M2 and more. As well, it has funded a handful of seed-stage companies through Cycle Capital’s Ecofuel accelerator program.
We chatted with Cycle Capital founder Andrée-Lise Méthot about Cycle Capital and why it’s focusing on cleantech and what the future of the fund looks like.
MTLinTECH: Why did you feel the need to create a fund that focuses on cleantech companies?
Méthot: At the end of the day we’ll soon be over 10 billion people on this planet and we need fresh air and fresh water. We can pray, but probably the best way is to provide new technology and to change our ways. And we see this with electric vehicles, new types of crops and water purification technology. I think it’s possible to dream with a lot of creativity and technology.
MTLinTECH: Cycle Capital has invested in companies like Inocucor, Lufa Farms, Green Mantra and Polystyvert. Why did you decide to fund them?
Méthot: We have a specific focus. We think the ag sector is one of the most promising in cleantech for many reasons. We need to see the planet, we need to increase our yields and we need to do that at least without pesticides and herbicides. How can we do that? By using technology like Inocucor.
MTLinTECH: Cycle Capital also created the Ecofuel accelerator. Are you making more of an effort to focus on startup companies?
Méthot: I think it’s important to support these companies very early and give them enough money to make sure our Canadian startups will be at the same level of US or Chinese startups. We’re in competition for this new green economy.
Our focus is more on the entrepreneur. It’s not just technology. It’s about the entrepreneur and their capacity to execute the business plan and conquer the world.
It’s important to know in cleantech we don’t start a local company, we start a global company from the beginning. The market is the world and principally, the green economy today is China.
MTLinTECH: Often it takes a lot of money to support clean tech ventures. Does this make it more difficult for a fund like Cycle Capital?
Méthot: In general we get companies that are capital intensive, like Enerkem and Green Mantra. For those companies we need to have more support from the government through venture debt, which is crucial when startups want to scale up.
For a company like Enerkem, which converts trash into clean fuels and chemicals, the cost of one plant is over $100 million dollars. To finance that…we need to have different programs and different support. Venture debt is crucial for this type of a company.
MTLinTECH: What’s in the future of Cycle Capital? Can startups in cleantech expect more funding?
Méthot: We put in place an accelerator and its important to have deal flow. The role of Ecofuel’s CEO Richard Cloutier is to make sure we can help our young entrepreneurs in Canada, bring them in at the right level and make sure they’ll have financial support. Cycle is there to support the Ecofuel effort to make sure we’ll have a very nice pipeline for the entire ecosystem. Not just Cycle Capital.
In terms of Cycle Capital, our next challenge will be to raise a bigger fund and bring more strategic investors to the table. Today we have a chance to get Brookfield, RioTintoAlcan and Hydro Quebec, but we need to increase the presence of strategic investors because they’re crucial when we scale up tech companies. They can make the different when we invest in a company. My challenge, personally, is to bring more smart money around the table.
MTLinTECH: Cycle Capital last raised a fund in 2013. Are you trying to raise a fund right now?
Méthot: (Laughs) I can’t say yes or no, as you know.
MTLinTECH: Any final thoughts on the cleantech market?
Méthot: In eight years I can say the market has had a very interesting evolution in Canada. My understanding is the market I knew 10 years ago in cleantech is not the same market today. The effort the ecosystem put in to create more companies will create an interesting deal flow over the next five years. I think it’s the cleantech time.