"Venture capital is sexy: The glamour of bringing a new business to market, the promise of big returns, the risk of losing it all," writes Hargreaves. "There's no doubt this fast money plays a big role in building the businesses of tomorrow - especially those in the burgeoning alternative energy sector, which has seen funding triple over the past four years.
"But venture capital investors often bank on a relatively quick payback, and have high expectations for the firms they back. Those expectations have sparked debate among renewable energy financiers: Is too much venture capital money a bad thing?" Hargreaves writes:
Venture capital flowing to renewable energy firms has surged to almost $3 billion last year from just over $1 billion in 2002, according to the data tracking firm Cleantech Venture Network.Read the full article here: CNNMoney
"There's just a ton of money trying to invest in companies," said Matt Cheney, head of MMA Renewable Ventures, a San Francisco-based renewable energy finance company.
That's good for startups looking for cash, so long as they can become profitable relatively quickly.
The typical time frame for venture capital firms - which provide cash and provide management expertise usually in exchange for part ownership - is three to five years, according to one venture capitalist.
"Money doesn't have a lot of patience in general," said Cheney. "I'd say eight out of 10 of these operations don't go anywhere. And for those eight, it gets pretty ugly."
i think this is irrational. venture funds don't look for 3 years - more like 7. and sits naturally between grants and private equity or debt.
if this stuff is going to work, it's going to be because it makes money. i wish that the people who know about the technologies weren't afraid (philosophically) of the only system that we know works - profit-driven commercialization.
Amen. There is "suspicion" about motives on both sides of the bed. But I couldn't agree more: turning greed to green is the only way this change is going to work.
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