CAMBRIDGE, Mass.--It's fashionable these days to ponder whether there's an investment bubble in clean tech. But I believe this discussion obscures a bigger problem for the clean-tech crowd: not enough money.
A panel of venture capitalists at the Technology Review EmTech 2008 conference on Thursday took the bubble question head on. The response from investors tends to be nuanced: no, there isn't a bubble, but there are some silly company ideas getting funded.
Before I delve into the details of the bubble debate, let me say that focusing on venture capital deals is a myopic view of the market that could ultimately give the "clean-tech revolution" a bigger black eye than just a few failed start-ups.
Clean-, or green-tech, venture capitalists will tell you times have never been better if you judge by the number of business plan proposals crossing their desks and their ability to raise funds. Many an entrepreneur and investor sees energy and environment as a ripe area for technology innovation.
What worries me is whether the hundreds of newly formed energy tech companies will have enough capital to actually succeed--and change the world as they all set out to do.
Insiders have been fretting about the dreaded funding gap, or "Valley of Death," for years. It's the stage a company must cross to take its technology to commercial scale, such as building a manufacturing plant. In energy-related businesses, it usually take lots of money.
Now the financial crisis could actually make that gap tougher to bridge, given the difficulty in the public markets and the projected cost of an anticipated Wall Street bail-out plan.
Spending hundreds of millions of dollars for say, a solar manufacturing facility, is outside the range of most VC funds. To some extent, project finance can fill in the gap, said CMEA Ventures investor James Kim. … Read more