George, it's all about the tipping point. And we can't forget that VC funding is by definition risky. if 1 in 10 investments actually make it to market, let alone IPO or acquisition, then they are ahead of the game.
Agreed - keep your eyes on the smart grid and solid-state lighting. Then there are companies like Liquid Robotics, which I wrote about. It has the potential to open up a whole new market for deep-water sensing applications.
You're right - it's about how VCs evaluate the viability of investment in these big capital intensive projects. Some commentators suggest that during the few years leading up to the Great Recession, VCs were investing in projects they had no business investing in because they were too speculative, the technology was immature, and the time to market was too long. There's a consensus that there's a return to more rational behavior in the market. That means fewer VC investments in big-ticket solar panel plants.
Prabhakar - I'd agree will you if there was a a 'level playing field' for cleantech investment and every country had the same rules for R&D investment. Unfortunately, that's not the case. China, for instance, has a state-supported industrial policy (with state-sponsored VC funding) for Cleantech. You can read all about it in the 12th 5-year plan. That's part of the reason companies like Solyndra went bancrupt - it couldn't compete. Same with wind power - check out American Superconductor's case against China's Sinovel.
In the advanced area like the Clean tech technology, US should take a global lead and should reach out to other developed and developing nations to pool the resources so that there is no duplication of R & D , there is a concerted effort to reduce global warming by using clean tech.
Agree, chanj, the government, most notably through the Advanced Research Projects Agency for Energy, must continue funding risky cleantech research with the greatest potential to produce disruptive new technologies. ARPA-E is putting a lot of money into energy storage and other battery technologies. The focus is on new materials and manufacturing techniques that can be used to scale up U.S. battery production. This is badly needed since there are few viable Li-ion battery makers in the U.S. beyond A123 and smaller startups like Envia Systems. But ARPA-E is under siege by some in Congress who think the agency is funding research that could be or is being funded by industry. Maybe, but we didn't get the Internet without a lot of federal research dollars. My colleague Bruce Rayner is correct that more VC money is flowing into cleantech, but analysts think a growing number of startups are reaching a "tipping point" as they prepare to commercialize their technologies. We'll know soon whether these efforts will fly.
Meantime, here's another view of the current state of cleantech development:
There are some "cleantechs" which requires high initial capital investment. For example, renewable energy; solar panel manufacturing facility requires a huge amount of initial cost. The industry would likely require both government, in form of academic research, and VC funding to start. The question comes to how VC evaluates the viable of the research and the possibility of turning the technology into a product.
The description of the category "cleantech" reflects an inherent bias. This list -- "technology in energy efficiency, energy storage, green buildings, green IT, electric vehicles, power electronics, renewable energy, solid-state lighting and the smart grid" -- covers a large swath of products and technologies, not all of which are equally clean or green. It seems strange to lump them all together, even for purposes of comparing year-to-year VC funding.
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