When Silicon Goes Green what happens to VC ?

by / Wednesday, 25 May 2011 / Published in Smartgrid-CI Blog

Google and Bill Gates keep on investing in renewable/green energies. After Gates announced yesterday his investment in liquid battery venture Sadoway, Google announced today a $55m investment in a Mojave wind farm http://www.greentechmedia.com/articles/read/bill-gates-and-total-invest-in-sadoways-liquid-metal-battery/

These investments are only one more step in IT giant’s direct involvement in the green revolution. Katie Ferenbacher, reminds us today  that Google alone has invested no less that $400M in Green so far.
http://gigaom.com/cleantech/google-has-now-invested-over-400m-in-clean-power

Gates and Google are not the only ones. A couple weeks ago, Jeff Bezos joined Microsoft’s founder in buying some equity in General Fusion, a start up company  that is pursuing the Holy Grail of nuclear fusion. http://www.techflash.com/seattle/2011/05/bezos-invests-in-general-fusion.html

And today, Softbank  the Japanese high tech conglomerate involved in wireless operations, software and ebusiness, is showing enormous interest for green energy. http://www.reuters.com/article/2011/05/25/softbank-solar-idUST9E7GG00B20110525?rpc=401&feedType=RSS&feedName=rbssTechMediaTelecomNews&rpc=401

The Japanese giant, owned by the « Japan’ s Bill Gates » Masayoshi Son will invest « a few percent of its $37B revenue » in dozens  of solar plants across Japan.

Do these stories reflect a fundamental switch of the « Silicon giants » on the market ? Very likely, but two very different strategies are at play in thoses moves.
Google and Softbank are seizing the green opportunity for a relatively risk free business diversification whereas Gates and Bezos are investing in long term prospects : nuclear fusion is not going to happen anytime soon and may actually never happen.
In doing so, the two billionaires may be reinveting a VC model that does not seem to be working so well for clean tech. As Pike Research Clint Whealock puts it : « There are many ways in which cleantech is not fully compatible with the VC model anyway. »  What do VC firms not like with cleantech ? Long term prospects ? Regulatory uncertainty ? Technical uncertainty ? Very likely a mix of all. Or maybe VC investors are becoming too prudent and maybe startups are paying the price for the pathetic internet bubble that took place ten years ago.  VC needs to reinvent itself for the green revolution. This is even more true when looking at how GE’s latest acquisition took place, through the Ecoemagination challenge initiative organized by…GE.
http://www.genewscenter.com/Press-Releases/GE-to-Accelerate-Commercialization-of-Power-Grid-Technology-by-Acquiring-FMC-Tech-an-ecomagination-Challenge-Investment-30da.aspx
Silicon giants and energy giants leave very little room for VC’s.

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