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Kai Ryssdal: The bump in oil today highlights an investment opportunity that’s indirectly related to the price of crude. Even though the economy overall has been sluggish, investment in what’re called clean-tech companies grew forty-one percent last quarter. Some say the red hot clean energy sector is going to burn a lot of investors. But Curt Nickisch reports from WBUR in Boston there are plenty of others who’re still welcoming the green bubble with open arms.
Curt Nickisch: Sahir Surmeli is a corporate finance lawyer at a Boston firm involved in clean energy deals. He says the combination of high gas prices and calls for alternative energy are attracting investors like moths to a compact fluorescent light bulb.
Sahir Surmeli: You’ve got a lot of folks saying, “Wow! I see a lot of people investing in a lot of new energy technologies, where should I be looking?”
He says money is increasingly flowing to emerging companies with as yet unproven business models. Some solar energy companies just years old now have market caps higher than GM.
Bob Metcalfe: In the same breath, I’d like to warn everyone that there is a bubble. And it’s great.
That’s Bob Metcalfe. He knows something about bubbles. The computer networking pioneer now helps run a Boston venture capital firm. It raises money to fund clean-tech startups.
Metcalfe: I will argue until the cows come home that the Internet bubble was very much worth it and a great example of how speculative fury can drive technological innovation. Now the trick is to repeat it for energy.
Metcalfe’s just one of a legion of former Web entrepreneurs migrating to clean-tech. Here in Boston, a non-profit incubator program is even holding classes in energy policy for onetime dot-comers:
Voice of instructor: … which dovetails a little bit with the exit strategy discussion we had earlier tonight …
At this session in a corporate boardroom overlooking Boston, Chuck Digate is listening intently. Years back, he launched and sold software firms and had planned on starting another. But now he’s hatched an idea for a clean-tech business. He wouldn’t tell me what it was, but says he’s definitely got the bug for alternative energy.
Chuck Digate: It’s just way too important and very interesting, potentially very lucrative outcomes as well. For you to think about going to back whatever you were doing. So I hope to do something ambitious in this space.
Ambition’s great. But temper it with realism, says Bob Crowley. He runs Massachusetts’ state-owned venture capital firm. Crowley says scores of investors caught up in all this clean energy bullishness stand to lose a lot of money.
Bob Crowley: If you throw enough spaghetti against the wall it might stick. Well, there’s a lot of spaghetti that ends up on the floor. And I think the same thing’s going to happen here.
Still, advocates of the clean energy boom say the more spaghetti the better. Russ Landon runs the Boston office of CanaccordAdams investment bank. He says for the technologies that do stick, the upside is enormous.
Russ Landon: Call it a bubble if you want, but we are nowhere in terms of how big this industry, i.e. the clean-tech industry, has to be.
Policymakers hope that a dozen years from now, renewable sources will provide 20 percent of the nation’s energy. To get there, Landon says it will take tens of billions of dollars in private capital. So far this year, investors have raised $3 billion.
In Boston, I’m Curt Nickisch, for Marketplace.
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