In Sunday’s Los Angeles Times, I write about how the rise of green technology is changing the way Silicon Valley venture capitalists do business:
Silicon Valley venture capitalists have always been about inventing the future — taking a wild idea, nurturing it with cash and creativity and giving birth to new products, companies and industries we once couldn’t imagine and now can’t conceive of living without: the Web, Google, the iPhone, Twitter.
But as green technology becomes the latest tech wave to break from the nation’s entrepreneurial epicenter, it’s now all about companies reinventing the past. Solar power companies, electric car start-ups and algae biofuel ventures aim to remake century-old trillion-dollar industries on a global scale.
Venture capitalists poured $4 billion into green-tech start-ups in 2008 — nearly 40% of all tech investments in the U.S., according to a survey by PricewaterhouseCoopers. Green-tech investment plunged in the first half of 2009 to $513 million as the recession dragged on, but there are signs of a rebound: Silicon Valley’s Khosla Ventures announced this month that it had raised $1.1 billion — the biggest first-time fund in a decade — that would be largely devoted to investing in green-tech start-ups, many in Southern California.
But green-tech companies face unique challenges, including global markets, tough technological hurdles and a future shaped by government incentives and regulatory policy. Those challenges are changing the game on Sand Hill Road.
“If you’re starting a Web 2.0 company, your basic needs are personnel and servers — there is no physical product, no manufacturing capacity, no inventory, no steel in the ground,” VantagePoint’s Salzman said, referring to software-based companies that provide services over the Internet.
Green-tech start-ups, he said, often need big money and investors steeped in big science and big government.
You can read the rest of the story here.