The Clean Tech revolution is purported to be the next big wave for Silicon Valley's best and brightest, and their venture capitalists. Whoops, no one told those venture folks that their investments in renewable energies would not resemble anything that they had done in the past.
It is a whole new ball game. The R & D cycle is often very long and arduous, and these deals require project financing with complex debt investments for building production plants. This is the antithesis of the standard technology investment cycle: first you get seed monies, then you get a Series A, followed by a B or C and then you file your S-1 for a public offering. Well there are no public markets to go raise enormous war chests of cash. These deals take much deeper investments in debt and capital financing, and they take much longer then a typical venture deal to come to fruition. In fact, these Clean Tech companies may resemble those in the pharmaceutical investment cycle much more than technology investments.
So will Clean Tech be the salvation of Silicon Valley as it rises to the challenge of innovation? The answer is that it could be. But to succeed the building blocks need to be in place.
We need stronger academic partnerships for R & D, and strong relationships perhaps to the national government labs.
Moreover, we need alliances with debt financiers just as we did in the early 90's to build big data centers.
And finally and maybe most importantly - we need to embrace regulatory affairs and get folks inside the firms that know the state, regional, federal and global regulatory turf to chart the course of these investments and work directly with the portfolio companies.
The call to action is for consideration of a Regulatory Partner, not a lobbyist, in each major venture capital Clean Tech firm. There it's been said and put on the table!
Do you want a third party with their hands on your deal book, or a member of the investment team that has the knowledge and a financial incentive to make these investments come to fruition? They can work with the DC lobbyists, but someone should be inside steering the boat through these unchartered waters. There are Stimulus dollars to be had for this very necessary project finance, there are partnerships that can be made with investment entities and national government laboratories, and legislation is evolving that warrants monitoring on the state, regional, federal and global level in real time.
Regulatory "know how" is going to be the next hill to climb, and as important as scientific innovation, if Clean Tech investments are going to succeed. Wake up to the new realities of this brave new world. If we, Silicon Valley, are going to help revive the US economy, we need to have viable sources of renewable energies that can be monetized. We need to embrace and understand cap-and-trade to offset the enormous investments in commercial production facilities. Those that can walk the Halls of Congress or the State Capitals are going to be invaluable as the US gears up for new regulations that impact these deals. Those venture investors that embrace this will ride off into the sunset with their saddle bags full having done a good day's work in providing jobs, renewable energies and economic gain for the US. Those that cannot, will go back to looking for the next proverbial Google.