U.S. Venture Capital Moving from IT to Clean Energy 13 comments
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U.S. venture-capital investment shifted from information technology to clean and renewable energy as total investment sank 7.1% last quarter compared to the same period last year, according to Dow Jones VentureWire.
The $7.3 billion invested in 583 financing rounds last quarter is down from the $7.9 billion put into 673 rounds during the same time in 2007, according to VentureSource, a research unit of VentureWire. The 583 financing rounds was the lowest third-quarter total since the third quarter of 2004, when there were 549, the data show.
Meanwhile, the $22.2 billion invested in 1,916 rounds for the year so far is down only 4% from last year’s $23.2 billion deployed in 2,082 rounds through nine months. But the relatively steady performance is a prelude to a considerable fall-off that’s coming this quarter, some investors said.
The financial meltdown is prompting firms to spend more time with existing companies than on new deals, and with stock prices plummeting, some say their next new investment will likely be in a public company, not a start-up.
One sector falling especially hard: information technology, where just $2.7 billion was invested in 270 financing rounds last quarter, down 20.6% from the $3.4 billion injected into 342 rounds in the third quarter of 2007.
The drop-off in IT investing also reflects growing interest in a new sector, clean and renewable energy. Venture firms pumped $1.1 billion in 32 financing rounds in this market last quarter, up 90.7% from the $619.5 million invested in 35 rounds during the corresponding period of last year. The $2.4 billion that firms have invested in 86 rounds this year already exceeds last year’s full-year total of $1.6 billion in 97 financings.
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This article has 13 comments:
Oct. 15 (Bloomberg) -- Treasury Secretary Henry Paulson persuaded nine major U.S. banks to accept $125 billion in government investment. Getting them to lend it out may prove a tougher sell. ``The truth of the matter is, they can't put a gun to their head and say you have to lend this money,'' said Charles Horn, a former official at the Office of the Comptroller of the Currency, part of the Treasury Department, and now a partner at the Mayer Brown law firm in Washington.
Actually Charlie, he CAN put a gun to their heads and make them do whatever he wants them to do. That's the whole point here. Spanky Paulson and his band of merry scumbags are the new Fascists: if they cannot get their way through lying (Which of course they did to Congress, but really they didn't have to because our Congress is replete with know-nothing, self-concerned, shit stains who care about as much for the common man as I care for the dead fly that is decomposing under my empty refrigerator...), they will get their way through coercion and force. It's that simple.
ALEXANDRIA (Louisiana), USA - US PRESIDENT George W. Bush said on Monday that he thought the US public's 'near panic' over the global financial crisis was easing as government-led economic rescue efforts paid off. After a round table with local business leaders, Mr Bush said 'I have heard that people's attitudes are beginning to change, from a period of intense concerns - and I would call it near panic - to being more relaxed.' People are 'beginning to see the effects of changes and the liquidity that is being pumped in the system,' said Mr Bush, referring to the US$700 billion (S$1 trillion) bailout plan.
I'm not sure who's worse, Bush or all of the people who believe him. Wow, it's really like living in a science fiction world, in which all of the citizens have their brains sucked out by some Fascist pig alien monster, and then they all stare blankly into the abyss with brain-numbing, empty smiles on their lifeless faces. First off, Bush is a liar and he's been lying to us for 8 years. That is pretty hard to refute. Secondly, the overwhelming majority of Americans have absolutely no concept either (a) monetary theory or (b) ever having had ONE original thought in their entire lives. The pretty little talking bobble heads on CNN and CNBC tell us what to think, what to feel...and that's what we do. The majority of Americans have never read any book, let alone a book about (God Forbid) economics. We watch TV and eat fast food in a gluttonous orgy of utter mindlessness. And George Bush's lies are spread by the empty-headed simps who sit in front of the FOX NEWS cameras and spew ANYTHING that they are told to spew. It boggles the mind. Bush says things are getting better, because he NEEDS things to SEEM like they're getting better. And we believe him because, well, because we are dumb. I mean, what else is there to say? Sorry for being so cold, but reality cannot be changed. And the reality here is that Bush is a liar, Paulson is a liar, and the entire system of FRACTIONAL RESERVE BANKING is going right down the shitter.
The global economy is in deep DEEP trouble, and hurling trillions of dollars of OUR $$$ at the situation, in order to increase lending and thus increase our level of DEBT, when it's lending and DEBT that got us into this mess in the 1st place, is madness.
So...I sit here in utter disbelief at how obtuse we are. Sure, in the near term things will appear brighter. The DOW will rise, because "panic and worry" will have been replaced by "optimism". I hate to tell you this: The situation that we find ourselves in has NOTHING TO DO WITH EMOTIONS LIKE PANIC OR CONFIDENCE, it has to do with DEBT. DEBT!!!!! And the more we allow criminals like Paulson and Bush to convince us to throw money at the crisis, the more disastrous will be the eventual outcome.
Einstein said it best:Insanity: doing the same thing over and over again and expecting different results.
As a director of the ONLY Heavy Duty (Diesel) CNG/LNG conversion Company to turn a profit this year, we can't get any VC funding without giving away the company. Using VC interest as a measuring stick of the potential of a given "space", without considering what these companies give away in return for the capitol, is fool hardy. What it shows is the willingness at this time for Clean Tech Entrepenuers to give away their technology to Vulture Capitolists.
Thank goodness "regular" investors have stepped in and bought shares of our Company when we needed a capitol infusion, Yes, we could be doing a lot more, much quicker if we were heavily capitolized by the VC crowd, but then we'd be working for someone forcing us to ship our jobs overseas and to manufacturer a cheaper product... Not worth it.
Almost 100% of all the goods we consume as our necessities of life are ultimately hauled by truck from distribution centers to retailers.
, the overwhelming majority of Americans have absolutely no concept either (a) monetary theory or (b) ever having had ONE original thought in their entire lives. The pretty little talking bobble heads on CNN and CNBC tell us what to think, what to feelk you know.
In "mass societies" like ours people live in cities far from the sources of food production, manufactures, drinking water, etc. So we need "transportation" to get to and from work and to and from the stores that sell the necessities (and luxuries) we buy. For most of us the only realistic form of transportation is our cars. If the refinieries run out of oil there is no gas for our cars.
Aviation fuel for air transport and bunker fuel for ships are other products refined from oil. So our entire transportation structure depends on oil, and the transportation structure is what makes available to us across vast distances all the things that are our necessities of life.
So contrary to what all the environmentalists seem to be impying, we cannot live without our oil, cars and trucks. These are economic "essentials", not "luxuries" that we can choose to do without.
Whatever you may think about peak oil, the simple fact is that about 1/2 of the US balance of trade deficit is caused by oil imports and, as McCain keeps saying, many of the suppliers "don't like us very much". So it is not only in the economic interest but in the national security interest of the US to work toward energy self-sufficiency. I'm no wild-eyed Gore claiming the US can "achieve" sufficiency in 10 years, but that is the goal that should be worked towards.
HOW can this be done? Domestic drilling in the short term is obvious. Everyone talks about the marvelous new energy technologies but in reality these don't exist yet in a form that can actually replace conventional energy. We can't live without oil-fueled transportation for a generation while waiting for someone to invent and mass produce a realistic "clean" alternative so for at least the next 10 years oil will remain as essential as it is today.
Solar power, taking energy directly from the sun, seems a no brainer. But solar power stops working every night wheh the sun goes down. And it's only about 20% efficient on cloudy days. So solar is not a reliable source of energy. It will probably end up being a good supplementary energy that we install on our roofs to reduce our use of electricity from the system, but solar is too unreliable to replace conventional coal, hydro and other souces of electricity.
Wind power suffers the same lack of reliability as solar: it doesn't work when it's not windy. And any of you who have spent any amount of time outside over a few decades will know that local climates change every few years. So you build billions of dollars of windfarms where it's windy today, and 6 years from now the wind patten has moved and your windfarms don't work anymore. In maybe another 18 years the wind pattern will shift back, but in the meantime your investment is idled.
I know McCain is a big supporter of nuclear but I agree with the contention that only desperation makes nuclear look good. McCain claims the radioactive spent fuel can be safely recycled, but I'm not sure I believe this. The capital cost of nuclear and the construction time is so enormous that nuclear power has to be heavily subsidized to compete with any other form of power we can make. And there's always the risk of a Three Mile Island or Chernobyl.
It takes more energy to extract hydrogen from hydrocarbons than you get from using the hydrogen as a fuel so hydrogen is a net loss of energy. Far more efficient technologies need to be invented before hydrogen will ever be a net energy benefit as opposed to a net energy cost.
Tidal power will probably work. Geothermal might work too. Both of them will certainly help at least as supplementary energy sources.
But for the immediate future the only viable, scalable clean energy is clean coal. Coal gasification technology--which converts coal to a fuel that burns as cleanly as natural gas--is ready for commercial development. Development is currently being blocked by the anti-carbon crowd whose brains have been infected with global warming religion. There are plenty of theories and lots of hysteria, but there is not a single piece of scientific evidence showing that CO2 "causes" global warming. I pay attention to the science of climate and I personally am convinced that CO2 does NOT cause global warming or climate change and I think it's time to move past the deluded hysteria.
But aside from these political problems, the technical problems of clean coal have been solved and it's ready to go industrial scale. North America has centuries of supply of readily accessible coal, so clean coal is probably the "clean energy" that will be first off the block as far as generating profits for investors.
Despite the bicycle riding crowd's contention that we can do without cars, anyone who lives or works outside an urban center CANNOT live without cars. Half of North America gets snowy winters when bicycles are impractical. Electric cars will be the next evolution in personal transportation. If over 10-20 years the US can switch to a significant extent from driving gasoline cars (using imported oil) to electric cars (using domestic electricity) that will help the energy security and economic balance of trade issues.
I have read your posts with interest. You have obviiously done some good research. I would like to add some perspective to your discussion.
The problem with fluctuating sources of power (solar and wind) can be addressed with new storage technology. Hydrogen is not a source of energy; it is an energy storage medium. Whether it (hydrogen) will become a widely used storage vehicle remains to be seen. An alternative is new battery technology. The current front runner is Lithium ion technology. There may be better systems not yet being developed or Lithium ions may prove to be the new standard. Whatever, grids supplied with large amounts of solar and wind power are not viable without storage systems not yet developed. Otherwise, you are correct that these two technologies can only be supplemental, not primary sources of electric power.
One additional note on hydrogen: I don't believe hydrogen production from hydrocarbons will ever be an attractive energy production/storage process. Hydrogen production from water may have a future. After energy is released from hydrogen the end product is water, the starting material. We have a loop system where the material resulting is the starting material, not true with hydrocarbon sourced hydrogen.
The one specific energy proposal that John McCain has made that I feel is the most important in his energy policy plan is the $300,000,000 prize for the development of a viable long range battery system for electric automobiles. (Do not take this as an endorsement of McCain or any other candidate.)
Energy storage is a critical factor for both electrical transportation and electrical grid use of alternative sources of energy that do not involve combustion.
It is clear that carbon dioxide levels are correlated with earth temperature levels. This correlation exists over very recent history (the past 100 years) and back to the age of dinosaurs. Does higher earth temperature produce more CO(2) or does more CO(2) produce higher earth temperature? It could be that both are true (or not). There should be no claim that more CO(2) could lower global temperatures. There is excellent science to support a theory that CO(2) contributes to global warming. However, it is very reasonable to contend that CO(2) is not THE ONLY cause of climate change.
Finally, hydrocarbons (natural gas, coal and oil) are natural resource materials. They are the best source of materials for ferilizers, asphalt, lubricants, polymers, plastics, many pharmeceuticals, etc. Obtaining these materials from biomass is much less efficient, especially in a world that has issues with food supply. When we obtain energy from anything we burn, we are destroying materials useful to the future centuries of human civilization on this planet. When we burn our natural resource materials, we are burning money. I'm not referring to the cost of production of fossil fuels today; I mean the added future costs of not having hydrocarbons readily available for future generations who must expend much larger resources for hydrocarbon materials. Not concerned with what happens more than 200 years in the future? I'm glad the Sons of Liberty were not thinking that way in 1775.
DISCLAIMER: I see the world through two lenses: financial and technical. My profession for the past 16 years has been financial planning and investment management. In addition, I have a Ph.D. in Physical Chemistry, a 34 year career in technology development and management in a major corporation and several years of college teaching experience (Chemistry).
There are so many (I’ve read about hundreds in the past few years) promising energy-oriented inventions and innovations in the works that dramatic improvements in our lives are in store in the next couple of decades. It took oil above $60/barrel (which is only the last 3 years) to motivate renewed interest in alternate energy that hasn’t been seen for 25 years. During that time material technology, computer modeling, etc. have advanced greatly making affordable alternate energy possible. Now it just a “foot race” to apply this new tech to alternate energy systems. Advancements are proceeding very quickly.
We are now beginning a multi decade change in energy production that will dramatically change our lives. Twenty years from now many of us will be energy independent in our homes with 40% efficient solar cells on our roofs. Some type of energy storage (we can only guess what it will be) will power our homes at night. We will have plug-in hybrids that may be powered by fuel cells when off the battery. Maybe the hydrogen for the fuel cell will come from hydrogen generated in our homes. The hydrogen in our cars may be stored in carbon nono-tube structures so we can travel 500 miles on 1 charge. Advanced biofuels may power trucks and heavy machinery. The list goes on and on. There will be energy-oriented improvements in the future that are unimaginable today like the internet was unimaginable 20 years ago.
All this cheap energy will lead to a powerful economic boom. This will lead to dramatic changes in the global economy. There will be strong movements to take on global warming, overpopulation, water shortage, pollution, poverty, disease, etc. This will lead to giant world-wide projects to address these problems.
These changes will dramatically change what companies will be the big players in the future. The next Microsoft, Google, Ebay, Apple, Research in Motion, or Amazon will most likely be in the energy sector. Good luck determining which companies will be the next breakout companies (just like the Internet companies in the 90s), but stayed tuned to the energy sector because that is where, I believe, it will happen.