Tuesday, January 10, 2006

Market sector catch-ups

Having been pulled away a bit lately, I'm going to lump together a lot of different articles and thoughts that have come up over the past few weeks...


Sewerbots for pulling communication cables through pipes underground. At what point does "water, the commodity" become valuable enough compared to "bits, the commodity" that this technology gets repurposed and adapted to the difficult but overdue challenge of water distribution infrastructure build-out and repair? Meanwhile, there are even bigger unmet needs and "pain points" outside of North America, and they're starting to drive ramped up spending...


Solar continues to get all the attention these days. But will the looming polysilicon shortage throw a breaker on the party? Expect a lot of early-stage investor interest in both silicon production technologies and any emerging solar technologies that minimize or eliminate the use of silicon altogether (ie: thin films and concentrators), and a major uptick in market share for such 2G solar technologies in 2006 (albeit from a really small base level). In the meantime, the solar land rush continues apace, and now the emerging-markets aspects are finally getting mainstream attention. It makes sense -- it's always been strange that the U.S. would play such an important role in supplying solar technology to the rest of the world without being the top consumer itself, especially when other regions are increasingly dominating electronics manufacturing in other sectors, and especially when there's already a lot of experience manufacturing products that use solar technology. This is one reason why even U.S. solar manufacturers are rapidly moving their own manufacturing overseas (see this link, too), to get closer to end-markets and lower costs. As emerging technologies become better commercialized, and innovation starts to take a back seat to manufacturing efficiencies, expect this trend to continue.

But while solar gets all the attention, other clean energy technologies are making their own progress. The ever-knowledgeable Tyler points out that the North American wind market is going gang-busters... but has the industry jumped the shark from a venture investor (i.e., proprietary and scalable technology) perspective? Probably not (there are definitely still intriguing innovations being developed and thus perhaps another VC investment wave yet to come), but it is somewhat telling that a lot of the financing activity these days in wind power is on the project side.

And, lest we forget, investor interest in fuel cell developments (terrific SOFC primer here) and storage markets and timing the hydrogen economy and biofuels (note: pdf) and energy infrastructure continues to grow apace -- they just haven't been getting the press lately.


Not by and of itself "clean technology," as we've talked about before, but with significant overlaps (see here, too), nanotech continues to attract significant capital. But as the linked article points out, only 9% of venture-backed nanotech startups have achieved exits to date. This is probably a sign of the early stage of the industry as much as anything else. But sooner or later investors are going to need to see more exit activity... Expect pressure for M&A exits to increase as investment periods draw to an end. Or, if the IPO market picks up, a mad rush...


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