Clean tech draws investors

Interest in solar power and other clean technologies is growing.
PALO ALTO, Calif. (AP) -- Martin Roscheisen, CEO of Nanosolar Inc., holds up a plastic vial filled with dark, purple liquid -- the secret ingredient behind a new kind of technology startup that's turning heads in Silicon Valley.
In a private laboratory here, Nanosolar scientists are designing low-cost solar electricity cells that Roscheisen submits will make solar power competitive with conventional energy sources.
The purple liquid is a nano-engineered material that "self-assembles" into tiny solar cells that convert sunlight into electricity.
"We're at the threshold of making solar electricity profitable," says Roscheisen, whose company raised $6.5 million last year from U.S. Venture Partners, Benchmark Capital and other investors.
Across the country, venture capitalists are opening their wallets to upstarts that, like Nanosolar, develop "clean" technologies in anticipation of a growing market for products that generate revenue without harming the environment.
Rising investments
In 2003, investment in clean technology ventures rose 8 percent to $1.2 billion while overall venture capital investment fell 14 percent to $18.2 billion, according to the Cleantech Investor Network.
The Howell, Mich.-based group defines clean technologies as technologies that allow for more efficient use of natural resources and greatly reduce ecological impact.
Venture capital firms are pouring money into clean technologies related to water purification, agriculture, transportation, manufacturing, recycling, air quality and alternative energy such as solar, wind and hydrogen.
"We're getting a bigger and bigger piece of the pie year after year," said Keith Raab, Cleantech's president and chief executive.
Among the startups that pulled in the most money last year were Evergreen Solar Inc., a Marlboro, Mass.-based developer of solar electricity systems that raised $29.5 million, and Powerspan Corp., a New Durham, N.H.-based maker of pollution-control technology for the energy industry that secured $20 million.
Bad experiences
Still, some venture capitalists remain wary about investing in environmentally friendly companies after getting burned in the 1980s, when solar and wind energy startups raked in venture dollars, and in the 1990s, when hydrogen fuel cells were hot.
Nanosolar was the first green venture investment for Menlo Park-based Benchmark Capital, but general partner Bill Gurley said the decision was motivated more by its belief in the startup's management team than the sector itself.
"There haven't been a lot of success stories in the clean-tech space," Gurley said. "There's no Microsoft, eBay or Cisco that says this is a fertile ground for venture investment."
The sector, however, has gotten a boost from a new California plan to invest $1.5 billion of the state's pension funds in environmental technologies.
See bright future
The market for alternative energy is sure to grow as global oil prices rise, fossil fuels become more scarce, states look for more reliable energy supplies and the United States reduces its dependence on foreign oil, investors say.
"There are other people at the table that are changing the supply and demand curve on a global scale," said Erik Straser, general partner at Mohr Davidow Ventures in Menlo Park. "The Chinese and Indian governments are seeking a better way of life for their citizens. To do that, they need access to energy."
The market for clean technologies also is being driven by increasingly stringent regulations on air, water and energy. And as the Internet, telecommunications and computer sectors mature, venture capital firms with plenty of money to spend are hunting for new markets.
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.