Venture capitalists in Silicon Valley have been searching for the next big thing in high-tech for years, but now many have switched to greener pursuits -- finding technology to help cut global warming.
Although commercial success could take years, venture capitalists are pouring cash into solar power, fuel cells, wind energy, biofuels, new lighting microchips, "smart" power grids, and other innovative energies.
"The best brains in the country are no longer working on the next pharmaceutical drug or the next Silicon Revolution. They want to work on energy," said Vinod Khosla, a top venture capitalists in Silicon Valley.
While there is competition from Canada, Germany, China, India and other nations, traditional energy companies have been relatively quiet.
"It is under-researched. There are easy pluckings. Oil companies spend no money on research, especially outside of how you discover more oil. All their efforts are token or nominal. The same is true of the coal business," Khosla said...
"We have yet to see any major successes. A lot happening right now is sort of a research-and-development wave for individual technologies, Silicon Valley and industry itself," said Regis McKenna, a veteran marketing strategist who helped launch Apple Inc., Electronic Arts, and Genentech, among others.
McKenna recalled that the microprocessor, the brain of computers, was developed in 1971 but it took another 10 years before pioneer Intel found a market for the device in personal computers.
More than two-thirds, or US$883.6 million, of all clean technology investments last year were made by US investors.
Cleantech Venture Network, an industry trade group, estimates that clean energy investment in Silicon Valley topped US$500 million last year, including not just venture capital but also corporate and some debt financing. The group estimates US$3.6 billion was invested across the United States and Europe.
Among the largest clean tech investments were US$75 million in solar cell maker NanoSolar of Palo Alto, California, and US$50 million for Los Angeles-based renewable biofuels producer Altra Inc.
Biofuels, wind power, solar photovoltaics and fuel cells are likely to pace new energy growth, according to Clean Edge.
While new spending on clean technology is growing far faster than classic venture capital sectors such as computers, health care or retail start-ups, it remains a tiny fraction -- only 3.7 percent -- of the overall market.
A growing sense of urgency to reduce the use of carbon-based fuels, which scientists blame for global warming, is driving the move in Silicon Valley.
"We're not debating whether climate change is occurring. We know it is and we have the capabilities to do something about it and move toward a cleaner energy future," said Ron Pernick, co-founder of the Clean Edge Inc., a research and consulting firm.