Investing in Innovation

One of Minnesota’s oldest investment firms is banking on the newest advances in clean technology.

Piper Jaffary

Photo: Josh Kohanek
Cameron and Quam at Piper Jaffray’s U.S. headquarters in downtown Minneapolis

Lois Quam is helping the investment house Piper Jaffray find the next new company that is building a better mousetrap—perhaps one that’s solar powered. Or biodiesel. Or cellulose. Or something we haven’t heard of yet.

Quam is the managing director of alternative investments for Piper Jaffray. She came to the 114-year-old Minneapolis firm in 2007 from UnitedHealth Group, where she was noted as Fortune magazine’s highest-rated Minnesotan in its list of “Most Powerful Women in Business.”

The future is now for Piper Jaffray and Quam in the clean technology and renewable energy sectors.

“I’ve always liked to work in an area that is socially relevant and has high potential,” says Quam. “As I became more concerned about climate change, I decided it was most important to me to work in the green economy.”

Quam’s “aha” moment came on a trip to the Arctic with explorer Will Steger. “It was something to see all that ice and see it melting,” she recalls. “It’s one thing to read about it and another thing to see it.”

At a conference in October in New Jersey, Quam told the audience, “I believe this green economy is poised to be the mother of all markets.”

In line with this outlook, Piper Jaffray searches for up-and-coming companies as well as middle-market corporations and other investment opportunities in the green fields of commerce. The firm launched the first U.S. “fund of funds” in clean energy and technology in 2005; the fund was so successful that it was closed to new investors in 2007.

To expand the firm’s global franchise in clean tech and renewables, Piper Jaffray also recently appointed Doug Cameron as managing director and chief science adviser. Cameron was formerly the chief scientific officer at Khosla Ventures and director of biotechnology at Cargill.

Cameron says the biotech industry is attractive to investors for several reasons. “This is partly because of the high petroleum-chemical industry feedlot cost, even at current low petro prices. [And the] bad carbon dioxide footprint of many current chemical processes, high margins of chemicals related to fuels, and lower volumes related to fuels.” As a result, he says it’s easier for startups to have an impact in this area.

In Minnesota, Cameron likes the growth possibilities of biomass and wind energy. He feels the state has the potential to become a leader in bio-based chemicals and materials, including plastics and specialty and commodity products.

“Bio-based materials are still a bit under the radar screen, especially given all the activity in Minnesota,” says Cameron. “Many new companies in this area are emerging all over the country.”

In North America and Europe, venture capitalists invested $5.2 billion in clean tech startups in 2007, according to the Cleantech Group, a San Francisco-based consulting firm.

“Piper Jaffray is focused on the emerging firms,” says Quam. “So the mid-sized firms become the great firms of the future.”

She says her company looks for three factors before it invests. One, does the company make something or provide a service that is an asset to customers? Two, does it serve a sizable market, so the business can grow? And three, does the organization have or can it get the resources it needs to be successful?

“In any investing, the details matter,” says Quam. “The green economy is a great category, but that doesn’t mean that every energy company is a great investment.”


MARK NEUZIL is a journalism professor at the University of St. Thomas, St. Paul. He is also a regular contributor to MinnPost.com, the author of five books with energy and environmental themes, and an associate fellow of the Institute on the Environment.