Living Green

'Green energy' start-ups drawing plenty of investor interest

SAN DIEGO — When it comes to the business of "green" technology, high-tech start-up companies see plenty of greenbacks on the horizon.

High fuel prices, declining resources, global warming and new state — and possibly federal — regulations requiring companies to reduce emissions are making environmentally focused young tech companies some of the hottest properties around.

Executives from Austin, Texas semiconductor start-up company Microstaq Inc. are learning that first-hand.

Microstaq says the silicon-based fluid control chips that it unveiled at a tech conference here last week can save 20 to 30 percent in electricity costs over traditional metal valves found in air conditioners and other equipment.

Whenever company executives meet with potential investors or customers, "that's the thing that gets them the most excited," said Mark Luckevich, the company's vice president of engineering. "The nature of our technology provides energy savings, and that's something everybody wants now."

Microstaq already has attracted more than $22 million in venture capital. During the DEMO tech conference here, interested investors had to get in line just to talk to Microstaq executives.

Other companies that formally launched their businesses or products at the dueling DEMO and TechCrunch50 conferences in California last week show the breadth of the clean-technology field.

Along with hardware companies like Microstaq were software firms whose products let businesses track the energy consumption of their computers.

New Internet sites let you find car-pool buddies online, track how many trees you've planted in your lifetime, get information on corporate environmental policies, or link up with celebrities or friends with similar views on how to change the world.

"We aren't seeing any shortage of new, young companies being formed right now," said Brian Fan, research director for Cleantech Group, which promotes and tracks investments in the clean technology industry. "Clearly there's a business opportunity here that attracts entrepreneurs — and that attracts venture capitalists."

According to Cleantech Group, nearly 100 clean-technology companies attracted $2 billion in venture capital in the second quarter of this year, up 58 percent from the same quarter a year ago.

Even as other types of businesses struggle to raise capital, clean-tech venture funding is expected to reach record highs this year, Fan predicts.

Beginning Monday in Washington, D.C., Fan's group is hosting a forum that is expected to attract hundreds of venture capitalists, entrepreneurs and energy policy makers.

Of course, any rush to a particular industry sector often results in more hype than substance and can create a good chance of a bubble. Remember the dot-com boom of the 1990s?

When it comes to the environment and energy, though, there are plenty of problems that still need solving.

"There's really no end to the opportunities," Fan said.

Just as important, the potential for profitability is very real and very large.

"If you look at the energy market alone, we're talking about a multitrillion-dollar marketplace," John Baumstark, CEO of Atlanta-based solar panel start-up company Suniva Inc. said in an interview earlier this year. "There's such a huge demand for energy ... that we have to come up with alternatives."

Sometimes the profit potential is less obvious.

Web company Avego wants to create a worldwide ride-sharing program that links drivers with passengers using their iPhones and the Internet. Drivers can screen prospective riders and earn a few dollars in gas money from those willing to pay.

Users also would pay a small percentage to Avego — probably 15 percent of a still-undetermined base price — "but the real goal is filling these empty seats we all see on the highways these days," said company founder Sean O'Sullivan.

O'Sullivan has already made millions after starting or funding about 20 high-tech companies himself or through his $120 million venture capital fund, SOS Ventures, which has its U.S. offices in Austin.

The Irish entrepreneur wants and expects Avego to be profitable, of course. But he admits it may take years or decades, and that making more money is only a part of his mission.

"I think people totally overestimate greed," O'Sullivan said. "When you go to work, you have to be proud of what you do. I want to do things that are meaningful ... and that add value to society."

Like O'Sullivan, Vicki Saunders is a "serial entrepreneur" who has already started several successful high-tech companies.

After she saw Al Gore's "An Inconvenient Truth," she knew she had to do something to help the planet.

The result was Zazengo, a Web site Saunders publicly launched last week that lets users track their impacts on the planet — such as miles driven, dollars donated, trees planted — and compare them with others in their network of friends, colleagues or co-workers. Later this year, 4-H Club members around the country are planning to start using the Web site to track their volunteering.

"There are so many ways for people to get engaged ... and so many people working on awareness," said Saunders, of Santa Cruz, Calif. "What (Zazengo) does is put the focus on the action" and results.