IBM: It's All About Smart Grid in 2009

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By Michael Kanellos

Ethanol and fuel investing exploded in 2007. Solar went bonkers in 2008. And in 2009, the money is set to flow into smart grid companies.

"I'm more convinced than ever that it's just about to happen," said Drew Clark, of IBM's Venture Capital Group in an interview today. "Cleantech may be the only category [of venture investing] that is left relatively unscathed and [VCs] are looking to put new money into traditional IT type of companies and smart grid is exactly that."

Clark in some ways is a human weathervane of VC trends. NYSE:IBM's VC group does not invest directly in startups. Instead, it meets with startups and VCs, tries to determine future trends and promising companies and then devises out ways to dovetail IBM's strategies and service divisions with these emerging ideas.

IBM then acts as a conduit for bringing these ideas to large customers. Thus, if Big Blue is excited about something, there is a good chance that a channel for bringing a new idea to market is already being assembled.

Smart grid is attractive on a number of levels. For one thing, a substantial amount of the power in the U.S. is wasted. UC Berkeley's Arun Manjumar recently said that the U.S. consumes 100 quads (or 100 quadrillion BTUs) of energy a year and 50 to 60 quads get lost as waste heat or by other means before it can be used. Smart grid technologies that can help shuttle around power loads over a network conceivably could put a dent in that.

Second, the technology better fits into the VC mold for building companies. Unlike solar or biofuel companies, most smart grid outfits don't need to build huge factories. They develop software or networking devices for controlling various aspects of power transmission or consumption.

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