Big names invest in cleantech
Bill Gates, John Doerr and Steve Case are all moving some of their assets into cleantech investments, reports the Washington Post:
Last year, AOL LLC founder Steve Case launched Revolution LLC, which has invested in companies such as car-sharing service Flexcar that promote sustainable lifestyles. In November, Microsoft Inc. founder and one of the world’s richest men Bill Gates committed $84 million to a California company to finance the construction of five ethanol bio-refineries. And last month, John Doerr, the venture capitalist who invested early in Google Inc. and Amazon.com Inc., set up a $100 million fund to invest in green technology. To be sure, the investments don’t make up a large proportion of their portfolios, and even with oil at $70 a barrel, alternative energy sources are still at the margins of the market. But just as two decades ago they saw the Internet as a way to make money and change the world, they now think green technology is poised to make a difference of its own.
“Greentech could be the largest economic opportunity of the 21st century,” Doerr said in a February press release announcing that Kleiner Perkins Caufield & Byers, the investment fund that helped underwrite many prominent tech start-ups, would raise $100 million for the green technology fund.
“The green, sustainability movement is going mainstream,” Case told The Washington Post last year, and “we want to ride that wave.”
A NEW ECONOMIC ENGINE
Clean technology, or ‘cleantech’, is a rapidly growing area representing technologies that offer an environmental benefit. In the 3rd quarter of 2005 Cleantech captured 8.1% of the $5.263 billion of venture capital invested in North America overall, up significantly from 6.1% in the previous quarter. Cleantech now ranks 6th in size behind Software, Biotechnology, Telecommunications, Medical Devices and Equipment and Semiconductors, according to Cleantech Venture Network LLC
By 2009, the Cleantech Venture Network estimates that clean technology companies will need about $3.4 billion in capital investment, CEO Nicholas Parker said at GLOBE 2006.
High oil prices have spurred the interest, but low corn prices and technological advances have also made ethanol a potentially cost-effective alternative. US Congress also recently passed a law mandating the replacement of gasoline additive MTBE by biofuel, such as ethanol. Canada will have a minimum renewable fuels standard of 5% by 2010, says Agriculture Minister Chuck Strahl.
Iogen, a Canadian company, is a world leader in the development of cellulose ethanol, and is currently considering whether to build a large new plant in either Canada or the United States, largely dependent on government negotiations.
Clean technology investment and development was front and center at GLOBE 2006, as exhibitors displayed the latest innovations on the trade show floor while experts shared their predictions for the future with conference delegates.
One session looked at the investment barriers faced by emerging technologies that require a high level of capital to become commercially viable. Efforts to promote Canadian technologies in global markets by the Technology Early Action Measures (TEAM) program were looked at as an example of successful technology development.
“A lot of the markets for new technologies are in the emerging markets,” TEAM President and CEO Rodney Semotiuk said. “Then you can come back to North America and get market share.” “The funding gets pretty sparse, so you have to get very creative and learn how to leverage,” he added.
Foreign investors were impressed by the Canadian government’s involvement in funding Iogen during its development of cellulose ethanol processes, Iogen Executive Vice President Jeff Passmore told conference delegates.
But challenges remain for the company as it seeks to raise the $400 million required to build its new plant. Although government funding is available for technology development and demonstration projects, there is no real government funding to assist with projects to commercialize large-scale technologies, Passmore said.
But the future remains bright and the cleantech industry is optimistic, given the high level of participation and positive views expressed at GLOBE 2006. Technologies such as hydrogen fuel cells, biofuels and alternative transportation were well represented, with many companies that have made the leap from innovation to the market after receiving sufficient capital investment.