Alternative Fuels Attracting Venture Capital (Wall St. Journal)
Appearing two days after the "green" State of the Union Address, and in the middle of a Clean Tech Investor Summit, this Wall Street Journal article covers all the bases.
February 02, 2006
"Even before President Bush called for a push into petroleum alternatives in the State of the Union address, energy start-ups were venture capitalists' latest technology craze," reports the Wall Street Journal in "Alternative Fuels Attracting Venture Capital" in today's edition.
If you look out five years, this is a sector that can be every bit as big as the Internet.
--Stephan Dolezalek, VantagePoint
The article appeared as a few hundred private investors began their second day of sessions at the Clean Tech Investor Summit in Palm Springs. Both covered all the common points about biofuels: the impact of the President's pronouncements, whether biofuels can be produced in sufficient quantity, their true cost in fossil fuels used to produce them, distribution challenges, and the science of cellulose. WSJ even interviewed investor Vinod Khosla, who will also turn up in FORTUNE's February 6 edition devoted to the same subject.
WSJ quotes Nancy Floyd, managing director at Nth Power, on the president's call for developing new ways to produce ethanol within six years: "Even though Jimmy Carter espoused energy independence, Bush has put a timeline on it... This means there's going to be a lot more venture activity in this sector."
Nth Power provided statistics for the WSJ article showing that, from 1999 through 2004, venture capitalists invested an estimated $4.4 billion in the energy-technology sector, including renewable energy and more-traditional energy projects. That compares with just $380 million in venture-capital money invested in the sector from 1993 through 1998. Energy tech got a further $500 million in venture capital during the first half of 2005.
To put those figures in perspective, VentureWire reported on January 23, 2006, that the amount raised by U.S. venture-backed companies in 2005 hit $22.13 billion, a 2.2% increase from the $21.65 billion recorded in 2004. The investment total rose despite ten less companies receiving funding -- 2,239 versus 2,249.
"If you look out five years," Stephan Dolezalek, a VantagePoint managing director, is quoted, "this is a sector that can be every bit as big as the Internet."