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Cleantech as the "white space" in VC — people are catching on

Rob Day: April 28, 2005, 3:39 PM
Thanks to Sanjay Wagle at Vantage Point for giving me the heads-up on this article:

Here's an article from Investor's Business Daily that talks about recent trends in venture investing.

Notably, there's this quote from Matt Garlick, research director at VentureOne:

"The two most popular areas we are hearing about are in energy and advanced specialty materials and chemicals."

Not exactly a direct hit on cleantech (clean energy, clean manufacturing, advanced materials, etc.), but a pretty good proxy... And the article goes on to note that analysts are projecting that demand for energy-producing and energy-saving technologies will only grow from here.

Poll: Americans are increasingly worried about pollutants

Rob Day: April 28, 2005, 1:14 PM
As this article describes, a recent poll of Americans found that 58 percent believe chemicals and pollutants are more of a threat now than they were 10 years ago.

For venture investors, this points to some of the emerging opportunities for new technologies in pollutant monitoring and abatement. As concerns rise, so does pressure on drinking water utilities, local environmental regulators, etc. to
  • a) know what contaminant levels look like in drinking water, air or emissions as the case may be; and
  • b) have some kind of plan for bringing those levels down to reduce exposure.
The development of new technologies can then also create even more pressure for their use, in a bit of a virtuous cycle driving rapid technology adoption.

Case in point -- For years the allowable level of arsenic in drinking water was 50 parts per billion (ppb), but after the Safe Drinking Water Act was passed by Congress requiring the EPA to re-evaluate that standard, as of January 2006 many utilities around the country will have to meet much more stringent allowable levels of 10 ppb. Why 10 ppb? In part because that was close to the lowest level that could be detected and achieved via treatment (3 ppb was actually the "Practical Quantitation Level", to be precise) at the time the new standards were being written, and in part to balance costs with benefits. But scientists have identified no "safe level" of arsenic in drinking water, having seen evidence of effects on cancer rates even at levels below 1 ppb.

Many utilities across the country are going to be in violation of this revised 10 ppb standard, some based on human-caused contamination, some based on region-specific naturally occurring levels of arsenic in groundwater (see the map here to see if your area is affected, if you're curious). No matter what the cause, however, all utilities are going to have to have a better sense of their contamination levels, and a plan for abatement when levels are too high. This is going to drive significant spending on testing, monitoring and abatement technologies, and smart cleantech venture investors are looking to get out ahead of that uptake.

And what happens if someone develops new technologies that can detect and achieve even lower levels of arsenic than are currently feasible? There's a good chance that could eventually drive down allowable levels yet again, creating a new cycle of technology adoption. Given the rising concerns Americans have about chemicals and pollutants as described above, the public won't likely tolerate having their water utilities fail to meet drinking water standards, no matter how stringent.

Now let's further extend this example: Looking outside of the U.S., proven arsenic detection and abatement technologies have even more opportunities to be used in international markets. In Bangladesh, for example, arsenic poisoning from contaminated wells is threatening tens of millions of people, which has attracted the attention of organizations (such as the World Health Organization) who have expressed a desire to fund the purchasing of technologies and systems to help ameliorate the problem. So technologies developed to address domestic pollution worries and increasingly stringent standards can find large markets overseas as well.

Arsenic in drinking water is just one example of how rising concerns about pollutants and chemicals could drive increased adoption of emerging water, wastewater, soil and air treatment and monitoring technologies. As the poll cited above shows, this driver is growing even stronger over time.

Why cleantech is a compelling investment area

Rob Day: April 27, 2005, 11:53 AM
Shameless self-promotion alert... but I did think this article might be of interest to Cleantech Investing readers.

In the latest LOHAS Journal (not yet available online), a couple of the partners here at Expansion Capital Partners have written a very nice and succinct description of clean technology and why it makes a compelling venture investment area right now.

You can find a link to a pdf of the article here, in the latest TBLI Group Brooklyn Bridge Newsletter, check it out. The article was written for a "socially responsible investor" ("SRI") audience, but also speaks to why cleantech should be a strong opportunity even for investors who aren't using any kind of environmental or social screening methodology.

And of course, the actress Daryl Hannah is also featured on the cover of the that issue of the LOHAS Journal, as you'll see...

Fuel cells: Soon?

Rob Day: April 26, 2005, 3:23 PM
Good article in Red Herring last week on the debate over when fuel cells are going to be commercialized. As the article notes, micro fuel cells for battery replacement are likely to be the first to be commercialized, but challenges remain.

Also note the entertaining quote from an ABI Research analyst:

"People have been saying for years, ‘Next year is going to be the year.’ But maybe this year we really can say that next year will be the year that we’ll be seeing some of these."