Clean, green technology moving into mainstream 

Venture capitalists and entrepreneurs came out of the Cleantech Venture Forum XII in San Francisco last week ready to make deals in what is becoming a major Bay Area investment category.

The definition of "clean tech" stretches from alternative fuels to products designed to cut energy consumption and beyond, according to Cleantech Venture Network LLC, a conference co-host. Essentially a manufacturing sector, clean tech companies need to produce factories and engineer materials, and which deliver a slower return-on-investment than computer software, investors said.

But as government demands more pollution controls and more diverse energy production, the sector has begun ramping up quickly. The field saw $2.9 billion invested by venture capitalists in North America in 2006, Cleantech Venture Network said. That was a 78 percent increase over 2005. California’s share was $1.067 billion, or 37 percent of all North American investment. This month’s conference drew nearly 800 people.

"I think the big take-home message from this show is that everything is moving into the mainstream," said venture capitalist Robert Koch of NGEN Partners, a Santa Barbara company with an office in San Carlos. "I heard a lot of people around the table saying this is their first time at Cleantech. I thought that the investor base was very well represented."

Like others, he came out of the show actively meeting with several companies to discuss potential deals. But as more money flows into the sector, there are still a lot of questions, investors said: Are there enough companies generating renewable energy to meet the goals of various states’ programs? How much money canthe still-young sector take? And will early venture capitalists begin seeing return-on-investment soon, as the companies they supported go public or attract larger investors?

"It’s an interesting time for clean tech exits … new capital is flowing in to graduate some of their investments to the next stage of development and financing," said David Kurzman, managing partner of Kurzman CleanTech in New York City, adding that the sector looks likely to continue its growth. "It’s clear that the political wind is at our backs."

He predicted that companies that make existing fuels more efficient and less-polluting have "incredible promise," along with those that find a use for existing waste.

For companies ready to make an initial public offering, the Alternative Investment Market of the London Stock Exchange is a popular choice, entrepreneurs said. But most of the firms present at the forum are years away from that point. Two of the local clean-tech firms are:

Adura Technologies

Adura Technologies was one of two winners of the California Clean Tech Open, and PG&E CEO Tom King said last week that the utility giant has agreed to provide rent-free office space to Adura and Greenvolts, the other winner. Adura’s technology allows offices to reduce their energy use from existing overhead fluorescent lighting by what seems in retrospect a simple concept: letting workers control their own overhead light.

"We break up a lighting circuit so it’s no longer just a switch on the wall," CEO Zach Gentry said. "[A full suite of lights] is usually on almost all day whether people are in the office or not."

He said Adura will have its first commercially ready product available for sale within a few months, and that its first installations will be in the University of California at Berkeley. It sought $1.5 million in venture fundingat the Cleantech conference. The money would be used for design improvements, outsourcing and making its products less expensive to build, Gentry said.

"I consider the Cleantech Forum to be the pre-eminent event for clean technology investment," he added. "They really are very inclusive."

Green Harvest Technologies

This Oakland- and San Francisco-based startup company probably couldn’t have timed its announcement better. On Tuesday, company CEO Greg Nelson said that his non-petroleum bio-plastics firm will unveil a reusable water bottle as its first product, and is looking into making baby bottles. Millions of the sports water bottles made from conventional plastics sell annually, he said. But Green Harvest will make its plastics from organic materials, not oil, and price them a little more than the $5-bottle standard.

"It has been used for single-use packaging," Nelson said. "We’re going to change all that."

Three days later, the Environment California Research and Policy Center reported results of a study claiming that bisphenol A, a chemical present in many conventional plastic bottles, leaches into baby bottles and is linked to developmental problems.

The water bottle doesn’t exist yet, and Nelson was at the conference to seek $2.5 million in funding. The firm owns the intellectual property needed to make the bottles, he said, and is working on other products for clients. But it plans to take the water bottles direct to consumers.

"We debated even whether to talk about it here," Nelson said, but added, "The demand is absolutely there."

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