Innovation Pipeline

Keeping score is a big deal in the world of venture capital. So when industry groups come out with yearly results for venture investment it’s a good time to ask the question: is there more growth ahead?

The Cleantech Venture Network in Ann Arbor, Michigan, says 2006 investment in renewable energy surged to $2.9 billion. That’s a 78 percent increase over the previous year’s $1.6 billion. Indeed, clean energy and technology has become the darling of entrepreneurs and investors–and even government.

The year started off with a bang when President Bush, in his State of the Union speech last January, used the words “oil” and “addiction” in the same sentence. That helped fuel some compelling trends. The CleanTech blog, by Richard Stuebi, takes a look at them. One of the strongest is biofuels, ranging from algae-derived energy to investment in ethanol plants to the ultimate endgame: cellulosic ethanol. Two others: solar photovoltaics and smart-metering technology for the power grid’s many onramps and offramps.

Still more: wind turbines, where technology is improving, and investment in new plants.

Government money is helping push these trends, much of it going to universities doing cleantech research. In California, Gov. Arnold Schwarzenegger proposed in the last week of 2006 $95 million for medical, environmental and technological research aimed at making sure the San Francisco Bay Area continues to be a hotspot for innovation. Most of that money, some $75 million, is tagged for the University of California in national and global competitions in its quest to fund both R&D and innovation in the areas of alternative energy and supercomputing.

Cleantech may not go down in the history books as the “biggest economic opportunity of the 21st century,” as Technology Partners general partner and cleantech investment guru Ira Ehrenpreis said in his editorial. But it’s surely going to be a very big deal if the previous year’s trends and energy appetite play out in our global economy. –Lee Bruno