5 questions with Alex Sloan

Expansion Partners principal Alex Sloan, 39, started investing in venture capital deals a long time ago in a country far away. He helped launch a $55 million fund called The Vietnam Fund Limited and was the only American in a partnership of mainly U.K. investors in 1992. The firm invested in companies of all stripes that were in one way or another poised to take advantage of rapid economic expansion.

After unsuccessfully raising a $100 million early stage fund with a friend from Hambrecht & Quist, Sloan joined Expansion Capital Partners as a principal in 2006. Since then, he has focused on reducing the demand for scarce resources, such as energy instead of trying to get into the energy production game.

Sloan helped source the ConsumerPowerline deal and remains deeply involved with the company. Expansion, along with Bessemer Venture Partners and others recently expanded the energy demand-response company’s funding.

Senior Writer Alexander Haislip caught up with Sloan upon his return from a vacation in Belize.

Q: What was it like as one of the first venture investors in Vietnam?A: The country was just beginning to crack open to outsiders, and I thought investing there would be a good way to have a seat at the table. It was a fascinating moment. Almost every investment we made was the first of its kind for Vietnam, and we had to get government approval on each deal because it was a new era for both the Vietnamese and the foreigners investing there.

Q: Why have you focused on energy consumption issues rather than energy production through ethanol or solar.A: Less than 6% of America’s electricity generation currently comes from renewable resources. That’s a growing market for venture investment, but what about cleantech opportunities in the other 94% of energy that we’re using? That’s a huge opportunity.

Our portfolio companies give their customers products and services that help them to evaluate and improve the way they are using increasingly constrained and expensive natural resources.

Q: Does capital efficiency play a role in this strategy?A: We shy away from cleantech opportunities that are very time and capital intensive. We just don’t want to get into project finance. We’re looking to find cleantech opportunities that have the potential to provide a venture capital return in three to five years.

Q: Tell me about Element Labs, one of your portfolio companies.A: LEDs can provide far more functionality in creative entertainment and architectural applications. Element Labs is leading that charge to ‘do more with more,’ and create improved energy efficiency at the same time.

Q: It seems as though Expansion Partners is focused on small efficiency improvements that can add up to big savings rather than groundbreaking new production technologies. What’s the thinking behind this strategy?A: We are working to achieve revolutionary sustainability and cleantech outcomes through incremental improvements in technology and natural resource efficiency.