There is no longer a simple linear path from angel investing to venture funds to initial public offering, Nordan said. Today, it is more common to require a level of growth equity or private equity funding before an IPO, since VCs are not prepared to extend funding into the hundreds of millions of dollars.

At the same time, the new business model for emerging technologies requires more investments and gestation times in excess of a decade before profitability. Nordan said that in the energy and cleantech fields, venture funds have responded by specializing.

Funds such as Rockport and Kleiner Perkins Caufield & Byers invest in early-stage technology, while Riverstone and FourWinds invest in deployment of semi-mature technologies. Only a few funds like Vantage Point try to span the gamut of development and deployment. And a new model of "clear-cutting" VCs, exemplified by Khosla Ventures, represent funders of last resort.

Nordan said that the smartest venture firms cultivate relationships with the buyers of technologies, ranging from OEMs in the semiconductor field to utility companies in the energy field, learning the needs of those customers five years out. The venture companies then build a startup based on the wish-lists of those customers.

Sometimes, the technology risk for a startup is so ill-defined, a business plan may significantly change. For example, 3Com founder and Ethernet inventor Bob Metcalfe helped found a company called Green Fuel Technologies Corp., which intended to use algae to process wastes from natural gas plants and ferment biomass fuels. Nordan said that the trials at Arizona Public Service's Red Hawk natural gas plant failed, but only because the algae worked too well, and ended up choking off lower layers of the algae by being too productive.

"The success of the business plan ended up turning on the model of conveyor belt Green Fuel used to schedule its algae processing, which certainly wasn't anticipated by the founders," Nordan said.

After his speech, Nordan elaborated on his views with EE Times.

Nordan had four rules for venture companies: Make non-obvious matches of technologies and solutions; be suspicious of exponential growth; maximize options to avoid surprises from left field; and avoid focusing on an ideal technology to such an extent that you fail to see a "good enough" technology in its wake.