Everyone knows that alternative energy is the future, and that clean tech has been the "buzz" for venture investment recently. But what's the truth behind the curtain? The National Venture Capital Association (NVCA) estimated that during the first nine months of 2008, $3 billion was invested in technologies that create alternative energy or conserve power. That's up from $1.9 billion similarly invested for all of 2007. But alternative energy is a big field, and some ideas are within the current investment trend and others are not. There must be winners and losers—and there most certainly are.
While in the past most alternative energy investment was directed toward large, splashy, capital-intensive projects - like financing factories to build PV panels to harness the sun or to house biofuels production capacity - those projects are running out of favor.
Peter W. Rothberg is a partner in the New York office of international law firm Duane Morris LLP. He practices in the area of corporate law with a focus on corporate securities, venture capital, mergers and acquisitions, financial transactions and digital media company representation.
It's a sign of our current cash-strapped times. Or call it looking for the more reliable doubles and triples player whose price tag won't break the team, rather than saving up and splurging on the big ticket home run hitter.... who'll break the bank and maybe your heart in the bargain. Sound familiar?
The current darlings of clean tech investment are less capital-intensive development technologies that monitor energy demand or conserve its use, rather than "create" alternative forms of energy themselves. These projects usually take the form of software or device solutions. Simply put, venture investment strategies appear to be turning back to the tried and true: the application of information technology to solve important problems. Right now, one of the biggest problems facing the planet is energy consumption. Venture capitalists are driving to be part of the solution. And the bet on the roulette wheel - - for now - - is to move the needle through clean tech investments that make more efficient use of capital to obtain the desired ROI. This trend is borne out by statistics made available by the NVCA. While 2008 saw almost half of all clean technology investment going to the development of new forms of energy, only one-third of clean tech venture investing was similarly directed in the first quarter of 2009. Let's see how long this trend lasts. We'll observe and report...
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