Starting in 2007, one of the most frequently heard comments in the green world became that greentech isn't really suited to venture capital-like funding.

The capital costs for green companies were too high. The time from initial investment to liquidity was too long, etc. Look what happened to Imperium Renewables! The biodiesel company burned through $200 million before laying off large numbers of employees and effectively going to sleep. Look at Ausra! The company ducked out of developing power plants to sell equipment. Over $1.6 billion into CIGS and very little to show for it.

The historical record actually supports the argument to some degree. Most of the big IPOs – First Solar, SunPower, Suntech – were pulled off without help from Sand Hill Road. Suntech's main VC was a business development group in the Communist Party of China.

Schadenfreude plays a part and maybe even weltanschauung. One day, a titan of industry tells you about meeting Craig Venter and learning all about synthetic biology in line for the toboggan lift at the World Economic Forum. The next day he finds out his latest cellulosic company is worth less than a portrait of Carol Channing done in macaroni art.

Yet, an odd thing occurred. VCs didn't listen. Forty-nine companies nabbed over $525 in July alone. That means they either: (A) aren't nearly the perceptive Type A personalities they claim to be; (B) were actually doing the Junior Jumble during that crucial meeting; or (C) know something you don't.

I cautiously bet on the latter and here's why:

1. Not Everything Takes Wads of Capital: Take smart grid and software companies for example. In the past two years, a bevy of software companies that manage building controls, home retrofits and energy consumption have sprung up. Like software companies everywhere, these companies are landing contracts without outlaying tons of cash for offices. Even somesolarcompanies are getting cheaper: Skyline Solar makes concentrators with auto body sheet metal and Cool Earth uses mylar.

2. Greentech Is Science Intensive: And the best method, so far, to take a concept in a laboratory to commercialization is to run it through the VC gizzard. National labs and universities do not have the personnel or time to turn companies into corporations on their own. Novel, breakthrough ideas born inside conglomerates often fail: Everyone remembers how Xerox messed up with the PC.

Private equity funds and government-sponsored funds, meanwhile, do best with meat 'n' potatoes concepts like retail and real estate. Look at Optisolar. The company deliberately avoided VC funds and was strictly funded by private equity. It burned through over $300 million. When it went under, a lot of the manufacturing equipment was still in the crates. The technology wasn't great. It did, though, have one really valuable asset: the rights to develop desert land.

Intel, Genentech, Compaq,VMWare – most of these companies would likely not have made it without investors honed in engineering. And in the future the same thing may be said about Lehigh Technologies, Kaai, Simbol Mining, Laurus Energy, Oasys, Genomatica and NuSource Power.

3. They Handle Founders: Like the founder of a certain display company who likes to play loud opera music during meetings. Or the co-founder that continually worried that competitors would count the cars in their parking lot to try to figure out how fast they were growing. Or the consumer electronics CEO who thought the best strategy for communication was to "get in the face" of anyone who said good things about other wireless equipment vendors.

Once, a VC told me he decided to pass on a solar company because he couldn't stand being in the same room with the founder for more than 30 minutes. Let's face it: Some people are incredibly annoying, a factor that can get worse when mixed with money, ego and the promise of scientific immortality. You need a zoo keeper.

4. They Have Friends: To replace founders. Granted, the career accomplishments of way too many parachuted-in execs are: (1) they are unemployed; and (2) they went to Stanford with the investors. But look at Aurora Biofuels and Amyris: Oil execs have been implanted that give these companies a chance. Bruce Sohn came from Intel to run First Solar's manufacturing. Intel and Applied Materials in fact are something like a finishing school these days.

5. The Google Comparison Is Irrelevant: One of the more commonly heard clichés is: "Where is the Google of greentech?" Where is the Google of search? It's not Yahoo. Google is a rare comet that succeeded spectacularly because of a combination of events that align only every few decades.  

It's like asking, "Where is the France?" among the breakaway Russian republics. Maybe it's in the same place where the Apple of Industrial Waste Processing is located.

Besides, technically, the industry has had a Google – First Solar (and it was dubbed as the "Google of solar companies" here). Before the crash, the stock grew 10 times a year after its IPO. It has also surpassed revenue and earnings expectations nearly every year.

6. A Path to Success Exists: The evolution of the chip industry will likely become the analogy for green. Back in the 1980s, chip companies needed to own their own factories to get into the market. That changed with the advent of foundries. After that, all a startup needed was a commercially interesting chip and enough distance so that it wouldn't threaten Intel. Many failed, but some succeeded.

In green, expect everyone to start going horizontal. Solar cell companies will become solar designers, and panel makers/installers will chose one or the other. Ausra's move makes perfect sense. Those that miss big smart grid contracts will dig out small services niches.

7. They Can Tolerate Failure: Failure is a badge of success. You hear that quite a bit. I'm not completely convinced. Sometimes failure is failure. But at least VCs are willing to spend to experiment. Greenfuel Technologies burned through $70 million – but at least we know algae bioreactors won't displace the Middle East any day soon. Pets.com: deplorably stupid. Zappos: brilliant. But no one knew that from the outset.

When you boil it down, the greentech startup world will become a farm system for the likes of people like Siemens, General Electric and IBM. And every farm team needs someone to drive the bus.