GigaOm's Katie Fehrenbacher post on the VC cleantech bust.
Katie starts discussing the controversy of VC Cleantech by taking a stance agreeing with Wired's post.
One of the more in-depth pieces on the cleantech venture capital boom and bust cycles was published in Wired this week. While not all of my peers will agree with me (I have already gotten in some heated debates over this), I think the story was a solid analysis of how a lot of VCs piled into cleantech investing in 2007 and 2008 with not a whole lot of knowledge of the sector and now have backed out of it (we have covered this a lot, too). The long-term promise of cleantech itself isn’t dead, but the boom VC cycle has clearly ended, much the way the dotcom boom went bust and the promise of the Internet arrived later on.
Katie jumps to the flaw in VC thinking.
But another layer to this story is that one of the key misplaced assumptions that VCs made in the cleantech boom times is that the rapid progress of Moore’s Law— which says that the number of transistors that can be placed on a chip doubles every two years — could be created for cleantech with a little bit of VC funding and Silicon Valley smarts. The notion (which is seductive but not true in most cases) is that the traditional energy industries throughout the world just didn’t do the right kind of innovation and that the Valley’s can-do spirit and open wallets would be able to unleash this potential.
I was always surprised that VCs choose to invest in physics constrained problems like solar cells, fuel cells, and batteries. But, hey the environmental stuff seemed like it was big money to be made. Until the Chinese came in as well with its government dominating by engineers.