An Incubator for Innovation

via today.lbl.gov

To halt climate change, the world desperately needs advances in clean energy. But in recent years, Silicon Valley, the nation’s engine for technical innovation, has turned its back on investments in the field.

Now, even as the world grows hotter, young scientists with fresh ideas about energy technology are finding it increasingly difficult to find venture capital to get them off the ground.

“The V.C. model isn’t working,” said Horst Simon, the deputy director of the Lawrence Berkeley National Laboratory.

But scientists at the lab may have found a better way to support entrepreneurial scientists who once depended on venture capital.

Clean energy investments were briefly a fad among Silicon Valley venture capital firms, peaking in the second quarter of 2010 at more than $820 million. But V.C.s soon learned that investing in unproven “hard” energy technologies was not as quickly lucrative as backing social networking and smartphone apps. By the third quarter of last year, venture investment in industrial energy technologies had declined to $209 million.

Many clean energy technologies require prolonged support to grow, Curt Carlson, a physicist and former president of SRI International, said, adding: “V.C.s hate that. They want to put in a slug of money and then have it scale itself, without having to put in a billion dollars.”

Solyndra, a promising maker of solar panels, was a spectacular failure, driven into bankruptcy in 2013 by Chinese competition after obtaining $536 million in Department of Energy loan guarantees. But it was hardly the only flameout: The valley’s venture capitalists backed a disappointing array of energy start-ups, including battery makers A123 and Ener1, Fisker Automotive, and Abound Solar, a maker of thin-film solar panels.

As interest cooled among V.C.s, energy entrepreneurs struggled to find support for ambitious ideas. Ilan Gur, a materials scientist at Lawrence Berkeley and veteran of several clean energy start-ups, observed the experience of two Stanford physics graduate students with a new idea for more efficient solar technology.

“They got laughed out of every V.C. on Sand Hill Road,” he said. “People told them: ‘Are you crazy? An early-stage materials investment in solar?’ ”

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