Cleantech

What is cleantech? "Is an extraordinary amount of money being flushed away on a pipedream?" Have you heard of it? Should you know what it means? What does this all mean?

Definition according to Wikipedia:
Cleantech is a term used to describe knowledge-based products or services that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy consumption, waste, or pollution. Its origin is the increased consumer, regulatory and industry interest in clean forms of energy generation—specifically, perhaps, the rise in awareness of global warming and the impact on the natural environment from the burning of fossil fuels.

One way I look at it, in very simple terms is that Cleantech has emerged in widespread use to describe a group of emerging technologies, industries, and financial asset classes based on principles of resource efficiency, science and second-generation production concepts in basic industries.

These emerging technologies are things such as alternative energy, renewable engery, wind warms, hybrid technology and technologies generally considered green and/or clean. Thought of another way, technologies and that help us lessen our carbon footprint.

Venture Capital Investment:
Investments in clean technology have grown considerably since coming into the spotlight around 2000. According to the United Nations Environment Program, wind, solar and biofuel companies received a record $148 billion in new funding in 2007 as rising oil prices and climate change policies encouraged investment in renewable energy. $50 billion of that funding went to wind power.

Overall, investment in clean-energy and energy-efficiency industries rose 60 percent from 2006 to 2007. In the United States, the clean tech industry is largely based in Silicon Valley. [SVB has started a small cleantech practice to compliment our technology and venture capital banking activities.]

The affirmative part is that the investment ramp-up has been too rapid to be responsible, as evidenced by the dozens of firms (not an exaggeration) that have rushed to form cleantech practices and/or funds within the past year. There will be a lot of losses in this space, particularly given the relative lack of potential acquirers (assuming the continued lack of an IPO market).

The negative part, however, is probably more important. The ultimate problem for VC-backed nanotech companies is that most of them were technologies without products. Kind of like if Google had created its breakthrough search algorithms in 1985. Cleantech companies, on the other hand, almost always have a clear vision of their products and market opportunity. Their problem is getting the technology to work. It’s obviously a more fundamental risk, but also should give VCs better guidance when it comes to follow-on financings or cutting bait.

Annual cleantech investments volume analysis
Year Deals Investment ($mil)
2005 100 532.7
2006 180 1,779.6
2007 168 2,604.9

* There has been a large ramp up in spending and given the potential market, investments are expected to continue substantial growth in 2008 and into 2009.

Conclusion:
When applying sustainable development as a solution for environmental issues, the solutions need to be socially equitable, economically viable, and environmentally sound.

Now if a few clean/green solutions come about and help improve the world, this could have a great impact on society (in a variety of ways). "Green" has been all the rage in the past 6-12 months and seems like a marketing campaign that will stick around for a while.

I have added a few blogs (see right hand column) that relate specifically to CleanTech / GreenTech.