July 20, 2005 12:02 PM PDT

Investors see green in clean tech

Bob Epstein has lived an entrepreneur's dream: He co-founded database software company Sybase in 1984 in his garage and got rich riding the industry's rapid growth over the next decade.

Now, as he searches for the next big thing, Epstein is looking beyond software, even beyond the computer business. His new pursuit? Clean technology, a nascent category that covers everything from renewable energy to water purification systems.

"Software was no longer the glamour hot topic it was," Epstein said. "And it seemed that long term, the two big issues were going to be biotech and things that reduced the use of natural resources. Those would be the big areas in the future."

News.context

What's new:
So-called clean technologies, which cover everything from renewable energy to water purification systems, are garnering more interest from investors and entrepreneurs previously tied to the information technology industry.

Bottom line:
Venture investments in clean technologies are still a fraction of overall investments in technology. Still, some entrepreneurs are making the jump, motivated primarily by potential profits in an emerging field, as well as the beneficial effect on the environment.

More stories on clean technologies

Clean technology is an area "where the rules have yet to be established. There are new opportunities," said Epstein, who also continues to invest in software companies.

The phrase "clean technology" may conjure up largely unfulfilled 1970s-era promises to replace fossil fuels with solar energy. But new companies and clean tech ideas are attracting more interest from technology veterans such as Epstein and from mainstream venture capitalists looking for the next big thing.

Bill Joy, a co-founder of Sun Microsystems who joined venture firm Kleiner Perkins Caufield & Byers earlier this year, said he sees a "huge opportunity to create new more-efficient forms of energy and apply that to the economy."

Other high-profile investors, such as Vinod Khosla and John Doerr, also of Kleiner Perkins Caufield & Byers, have said they're exploring clean tech, while Google co-founders Sergey Brin and Larry Page were early investors in Nanosolar.

Some recent examples of growing investor confidence include solar energy companies HelioVolt, Energy Innovations and Nanosolar, which each announced substantial venture funding in the past few months. Mohr Davidow Ventures, which has a long track record in computer technology and biotech, participated in the Energy Innovations funding, as did Idealab, a company better known for its work in search and dot-coms.

Though the amount of money dedicated to clean technology start-ups is a fraction of what goes into technology overall, entrepreneurs and investors say the field is showing signs of a maturing and potentially profitable industry.

"Fundamentally what's changed more than anything else is the technology," said Nicholas Parker, chairman of investment group Cleantech Venture Network. "The crossover from IT and materials (science) into the clean tech space has dramatically improved the offerings of products and services and made it a lot more economically attractive."

As technologies to reduce industrial waste or cut down on pollutants improve, businesses are increasingly willing to invest in products for financial reasons, rather than simply to comply with regulations as they've done in the past, Parker said. That demand, coupled with new technologies, is helping to solidify the industry and create opportunities for entrepreneurs, he said.

Making the jump
Vivek Tandon has already made the transition from the information technology industry to clean tech.

Tandon looked at the environmental technology arena in the 1980s but decided it was too early to jump in. Instead, he got his Ph.D. in

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don't forget Martin Tobis and Seattle Biodiesel
Venture Capitalist Martin Tobias (www.deepgreencrystals.com) has left Ignition Partners and started Seattle Biodiesel
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