How the Georgia Senate Race Could Affect LA's Clean Tech Industry
Clean tech companies could see a boom under President-elect Joe Biden, but just how much hinges on Tuesday's Senate election in Georgia.
A large part of Biden's platform is devoted to a plan to "clean energy," with promises to invest $400 billion over 10 years into innovation. If the Senate remains in Republican hands, his plan is unlikely to get as much traction, so environmentalists are looking at Tuesday's Senate races in Georgia as their best hope. A Democrat sweep could mean a big win for California, home to dozens of green energy companies and a national leader in the environmental legislation.
"Unless the Senate changes, I'm not sure that the big spending is going to happen," said Shon Hiatt, a professor at the USC Marshall School of Business.
With a Republican Senate
If the Senate remains a Republican majority, it will likely approve a few tax credits for renewable energy, but the $400 billion Biden wants to invest in clean energy and tech would likely remain unspent, Hiatt said.
"It's not going to be as big as he says it's going to be," said Hiatt. "But regulatory-wise, he will push through the EPA for more stringent air quality measures and that will have a positive impact on renewable energy push here."
California's burgeoning green tech industry had been on the outs under the Trump Administration, which threatened to rescind a signature environmental policy — a tailpipe emissions waiver that allows the state to enforce tougher standards than the federal government. Under a Biden administration, that waiver will most definitely remain in place — making investment into clean tech less risky. And it would help solidify the state's push for greener regulations.
Even without a Senate majority, the Biden administration will be able to roll back many of the previous administration's efforts to undermine environmental protections, and it could implement new policies. A green shift in focus could help push state and local governments that have been reluctant to embrace green technology to do so.
"Policy on the state level is influenced by federal strategy and focus," said Enervee CEO Matthias Kurwig. The Culver City-based company provides a platform for utilities, manufacturers, retailers and governments to help them make energy-efficient choices when buying products. "So we do expect already-committed states to do more in terms of decarbonization and reluctant states will have stronger incentives to make a move in the right direction."
Enervee currently works between companies and utilities such as the LADWP and SoCalGas in Southern California.
El Segundo-based company EV Connect supplies charging station software to the LADWP, several L.A. Caltrans stations, L.A. County and several other local and national organizations. The coming years should help it, after California Gov. Gavin Newsom signed an order to phase out fossil-fuel-reliant cars by 2035.
Its chief executive officer Jordan Ramer, said that under the Trump administration, electric vehicle technologies had not received much federal funding. But Biden's plan includes installing 500,000 new electric vehicle charging stations nationwide by the end of 2030 and migrating the federal fleet to electric vehicles.
"Those two items are extremely impactful to our business in helping to support the federal government in meeting those goals," said Ramer. "500,000 public charging outlets would be just an order of magnitude — larger than what we have done over the last ten years."
These charging stations would be available to anyone with an electric car, which could speed up adoption of electric vehicles.
With a Democratic Senate
Should Georgians elect two Democratic senators, the Senate will be under Democratic control, and Vice President-elect Kamala Harris would have the power to make any tie-breaking decisions.
"If Democrats win," USC Professor Hiatt said, "Biden could absolutely start changing how the budget is going to go, and what grants will go to renewable energy, and the taxes that could be put on and taken away from companies."
That could be a windfall for SoCal's clean tech companies, and enable California to push for more funding, not just legislation enabling clean tech innovation, he added. It would also likely mean that Biden's $2 trillion climate plan would get more traction.
"It's a huge and ambitious plan," said Patrick Maloney, chief executive officer of Santa Monica-based Inspire Clean Energy. "And we do see a lot of the benefit of that investment, making its way into the accelerated growth and new wind or solar facilities, into the grid."
Inspire is a clean energy company that operates as a subscription service. Enrolled homes pay Inspire a flat monthly fee, rather than their utility bill. Inspire then matches each home's energy usage with clean energy by purchasing wind renewable energy certificates (RECs) from wind farms. The hope is that by giving customers the ability to choose where their energy is coming from, consumers can help quicken the transition to clean energy.
Maloney said that missing from Biden's plan, which focuses on getting federal funding to larger national projects, is this focus on customer choice.
"In all those policies, the one thing that's noticeably absent is the consumer," said Maloney. "We really need to see policy leadership moving towards fully competitive markets that empower consumers to take their good intentions and transform them into action."
EV Connect, Enervee and Inspire all agree that Biden's win was a good thing for clean tech. Even if they don't receive funding, they will receive support in policies and initiatives.
"A lot of these initiatives are going to actually move forward. And I think a lot of investors are putting money right now into renewable energy companies, because they see the trajectory, and it will have more of a positive trajectory toward renewable energy," said Hiatt. "But again, a lot of this depends on what happens in the January 5th runoff. If Democrats win ... President Joe Biden could absolutely start changing how the budget is going to go, and what grants will go to renewable energy, and the taxes that could be put on and taken away from companies."
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Culver City-based Maestro, a platform used by pop star Billie Eilish and other entertainers to stream their performances, has landed $15 million in a Series B round.
It was backed by industry heavyweights from Sony Music Entertainment to Twitch's co-founder Kevin Lin, who are eying digital concerts and live streamed shopping as future revenue hot spots.
The interactive video platform lets creators like Eilish make money from ticket sales, subscriptions and even streamed ecommerce events. The company touts a long list of artist and industry partners, including Epic Games, Shopify, Microsoft, Adweek and Universal Music Group.
Tuesday's announcement comes after a year of steady growth for Maestro. The company said in a statement that revenue tripled in 2020. In the past six months, its team has grown five times over.
And since May, when the company launched its monetization features, creators on the platform have secured "millions of dollars."
Maestro's interactive video platform lets creators make money from ticket sales, subscriptions and even streamed ecommerce events.
Especially during COVID-19, platforms like Maestro have opened up new streams of business for celebrities. Music streaming companies like Wave, Mandolin, Veeps and Looped Live have become more attractive to investors as creators find new ways to tour virtually. But it's unclear whether these sites will hold onto viewers post-pandemic.
"Maestro gives artists greater flexibility and control to build the most engaging and customized events for their fans, allowing creators at any stage of their career to put together a world class live stream event," Sony Music Entertainment's Dennis Krooker said in a press release.
"We serve the creator as a partner in their journey and the achievement of their dreams," founder and CEO Ari Evans added.
The Series B bumps Maestro's total funding to $22 million. NetEase, Acronym Venture Capital and Michael and Amy Morhaime, former executives at Blizzard, contributed to the round.
A list of existing investors — SeventySix Capital, The Strand Partners, Stadia Ventures, Hersh Interactive Group, and Transcend Fund, and early Zoom employees Richard Gatchalian and Aaron Lewis — also participated.
Francesca Billington is dot.LA's editorial fellow. She's previously reported for KCRW, the Santa Monica Daily Press and local publications in New Jersey. Before joining dot.LA, she served as a communications fellow at an environmental science research center in Sri Lanka. She graduated from Princeton in 2019 with a degree in anthropology.
NFTs (non-fungible tokens) are a novel form of ownership that could rejigger the financial landscape for creators. Even if the market for some of them proves frothy, this blockchain-based technology presents a unique way for artists to make money and engage their fans. With experimentation already underway, the gates are open for them to do what they do best: get creative.
Several startup founders and musicians are looking to this incipient market not just as a means of selling digital collectibles, but as a unique way to offer fans exclusive, paid experiences.
"Any new avenue of potential profit is exciting in the music industry, considering the lack thereof from streaming and [the need to rely on] touring," said Brian Spencer, one half of the L.A.-based musical duo FINKEL.
There's nothing new about creators offering fans exclusive perks. What is new is that they can now be linked to an NFT that also functions as a "key" or "passport." Many artists are hoping this linkage can stoke demand for perks, thanks to the innate human attraction to ownership.
"There's a lot of psychological evidence that owning things matters a lot to people," said Valentin Haddad, a professor at UCLA Anderson School of Management who studies how and why people make financial decisions.
He pointed to the so-called "endowment effect," which, research has suggested, makes people value things more when they own them, simply because they own them. Since NFTs are a certificate of ownership, linking them to an experience – like a backstage pass, or a producer credit – should boost the value fans see in those experiences, Haddad said.
"I think the idea of tying some experiences, tying something more special, to the object [underlying the NFT] is going to increase," he said. "We're going to see lots of creativity."
Illmind is auctioning 10 NFTs linked to audio files he created that owners can use royalty free.
Rikin Mantri's recently launched NFT-minting and -trading platform, Curio, has sold about $130,000 worth of tokens tied to graphic novel characters the company licensed, and it plans to expand soon into other IP, including music. Mantri sees the eye-popping prices capturing headlines as indicative of a bubble, but thinks NFTs have enduring potential.
"We think NFTs have a strong use case in building digital collectible collections and offering experiences around those collectibles," he said. "It's a completely new incremental revenue stream."
Kings of Leon, the Grammy-winning band, released their new album last month alongside a series of NFTs, six of which were high-end "golden ticket" versions that granted token owners lifetime front-row concert tickets. In February, 3LAU, a DJ, auctioned off a topshelf NFT that entitled one fan to creatively direct a new composition.
Rapper Post Malone is planning to sell an NFT linked to a private game of beer pong. Illmind, a Grammy-winning DJ, is auctioning 10 NFTs linked to audio files he created that owners can use royalty free. Electronic musician Aphex Twin recently turned an NFT into a digital scavenger hunt. And Logan Paul, a YouTuber, linked an NFT to the opportunity to watch him unbox rare Pokémon cards.
Other creators are taking a less experiential and more charitable approach to offering NFT products. Street-artist Shepard Fairey, best known for designing the Obama "Hope" poster, is working with East Hollywood-based Verisart to auction off a digital artwork as an NFT, and donating the proceeds to Amnesty International. Pussy Riot, a Russian feminist punk rock group led by activist Nadya Tolokonnikova, recently minted four NFTs tied to a video produced by young AR pioneer Asad Malik of La Cañada-based Jadu, some of the proceeds of which went to a shelter for domestic abuse survivors.
Meanwhile as the metaverse inches closer, the range of perks and experiences that can be tied to NFTs is growing. One sign of things to come is Decentraland, a virtual world with its own blockchain-enabled currency that has hosted digital parties that require NFT-ownership for entry.
The same technology that enables these unlockable perks, whether digital or in-person, also allows artists to retain a financial stake in all future sales of the NFTs they issue. Stipulations like sending 10% of the price paid for an NFT to a specified bank account can be executed automatically: thus the term "smart contract."
Smart contracts are one element that distinguishes the Ethereum blockchain, on which most NFTs run, from the blockchain that underpins Bitcoin and many other cryptocurrencies.
They're also what could make NFTs helpful to smaller artists in particular. Since smart contracts can theoretically automate tasks like preventing fraud and scalping, they open up new opportunities.
"It's giving artists lots of access to ways to share experiences and share things that big artists could always do [but] small artists couldn't," Haddad said. "The benefits are likely to accrue to the top, but I think it will benefit everybody by creating a better way to exchange with your fans."
Artists' NFT Concerns
One downside to NFTs is the high volume of electricity they use, which can harm the environment. That's turning some artists away from them for now.
FINKEL is unlikely to pursue NFTs until the environmental concerns can be addressed, Spencer said.
One way of doing so could be a shift in how the blockchain works. Validating who owns what on a blockchain has largely relied so far on a method called "proof-of-work," which requires intensive computation that uses an immense amount of electricity. Some observers say an alternative method, called "proof-of-stake", would require less and could be less environmentally harmful. Although proof-of-stake has not been widely adopted, Ethereum has publicly stated it wants to transition to it, in part because of its environmental benefits.
Beyond environmental concerns, some artists bridle at NFT perks because of their inherent exclusivity and transactional nature.
Rebecca Arango, aka Oddnesse, thinks the tactic could perpetuate what she views as a deeper problem underlying the tenuous financial situation that many musicians find themselves in: fans have lost the human connection they once had with the artists behind the music they love.
"It's like the music just comes and goes and it'll always be there, and if one artist goes broke and gives up, there's always another one where that came from," she said.
But she concedes she may be fighting an uphill battle.
"I'm still going to advocate for the [intrinsic] value of the songwriting and the records," said Arango. "[But] if people are really into owning these digital tokens, I'll have to get with the program."
Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake