Saturday, August 13, 2011

VCs pull out of clean tech

More bad news for "green":

Now many venture-capital firms are going back to their roots. Dozens recently stopped making initial investments in clean technology companies, according to Dow Jones Venture Source. Many that continue to invest in clean technology are shifting to areas such as energy efficiency, which includes low-capital projects such as software for monitoring and reducing energy consumption, according to an analysis by the Cleantech Group. The money that still goes to the solar industry is now directed to companies with small capital requirements. Globally, nearly seven-eighths of clean-energy funding—including financing for wind farms—goes to established technologies, says David Victor, director of the Laboratory on International Law and Regulation at the University of California, San Diego. "We're on the cusp of a severe challenge for energy innovation," he says.

One just can't build a new business model and a new technology relying on government subsidies. The scale of commercial introduction is the key difference between governments' involvement in early Internet development in the 1970-80s and the 2000-10 attempts to deploy green energy across the US and Europe. That is, the Internet was developed on the scale of an extended R&D proeject and did not compete with any mature large-scale existing commercial offering. In contrast, green energy had to compete with very mature, highly efficient commercial technologies. Internet was a new Betting Ground while green energy was positioned as a Better Mousetrap, prone to a failure even with huge subsidies (see the 4-Q diagram below).

tags: energy, business, trade-off, efficiency, synthesis, 4q diagram

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