|Funding Rises for Clean-Tech Start-Ups|
July 11, 2008
Despite the slow economy, venture-capital funding of clean-tech start-ups
in the USA and abroad is on pace for a record year, according to a report
In the second quarter, venture funding for nearly 100 biofuel, solar, wind
and clean-water start-ups hit a quarterly record of nearly $2 billion — a
58% jump from the same time last year, says the Cleantech Group, a market
research firm in San Francisco.
The rise in clean-tech funding comes despite a limping U.S. economy and
weak markets for initial public offerings, mergers and acquisitions — the
traditional "exit strategies" for entrepreneurs and venture capitalists
hoping to sell their stock publicly or sell to a larger company.
"Interest in clean tech continues to show robust growth, despite the
impact of economic headwinds and credit market restraints," says John
Balbach, managing partner at Cleantech.
Venture firms, start-ups and corporations are pouring more dollars into
clean technologies because of higher energy and commodities prices,
tightening supplies of oil, tougher regulations on carbon emissions and
other economic factors, says Brian Fan, Cleantech's senior director of research.
At the same time, venture capitalists are shifting more of their assets
from the traditional sectors of software, medical devices and
biotechnology into the clean-tech arena in the USA, Europe, Israel, China
"Investors and entrepreneurs are making two big bets," Fan says. "How do
we replace coal as the primary fuel for electricity generation, and how do
we replace oil as the primary fuel for transportation?"
Much of the funding is going to young companies working on:
•Solar thermal technology. Start-ups such as eSolar, SkyFuel and
BrightSource Energy are building large-scale, solar thermal technology
that creates steam to run turbines.
•Second-generation biofuels. Range Fuels, Aurora BioFuels, Greenline
Industries and other start-ups are using algae, cellulosic ethanol and
materials other than food crops.
Clean-tech investments and technologies are getting more attention mainly
from companies in the auto, transport, shipping and petrochemical
industries, which are paying higher prices for raw materials, Fan says.
Clean-tech start-ups still have a long way to go, though. Fan estimates it
will take five to 15 years before clean-tech products and services are
embraced by mainstream corporations and have a large impact on the economy
and the environment.
"We're still in the very early stages of the game," Fan says. "But once
growth companies prove their technologies, fine-tune their business models
and build sales channels to customers, we'll start seeing a steady
progression of acquisitions by large companies."