Great article from The Wall Street Journal:
Why Venture Capitalists Abandoned Clean Energy
A decade ago, clean-energy companies were the hot trend that venture capitalists were chasing. Oil and natural-gas prices were on the rise and Al Gore’s “An Inconvenient Truth” had just made its premiere.
But high hopes that the clean-energy sector would replicate the big returns of biomedical and software startups quickly faded. Instead, monumental losses piled up: Venture-capital investors lost more than half of the $25 billion they pumped into clean-energy technology startups from 2006 to 2011.
It is not economically viable unless there are large government subsidies (ie: our tax dollars). There follows an interview - here is just one exchange:
WSJ: Why didn’t it work for VCs to continue betting on clean-tech startups?
DR. SIVARAM: First, we found these investments were illiquid. They would tie up capital for much longer than the three- to five-year time horizon that VCs preferred.
It also takes a lot of money to get fundamental science right and to scale it up. Building extensive factories and building demonstration projects to scale, those were not activities that VCs ended up being willing to fund at the hundreds of millions of dollars level.
Third, energy companies or clean-tech companies were going into markets that are legacy industries, for which a product already exists that does a pretty good job. So when you’re a solar-panel company competing with cheap electricity from natural gas, you don’t have the benefits of high margins. You instead have to compete at the razor-thin margins of the commodity markets.
And finally, the fourth reason we found was that the valuation premium that companies might receive upon exit, even if they were successful, simply was not high enough to justify the investment put into them.
I would love to use alternative energy but it is not economically viable and nothing is peeking over the horizon. What is viable is nuclear reactors - LFTR and nothing else.
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