A new model for technology innovation: “Search and Development”

7 02 2010

Source: today.ucf.edu

Cleantech is on its way to potentially become the next transformative wave of innovation. As often, anticipating what the future will hold is about understanding how the past unraveled. Indeed, there is much to learn both in terms of investors’ mental models and potential analogies from past waves like the Internet and Biotech.

The emergence of Information technologies marked the triumph of the VC-backed model. The business and mainstream media helped build the myth of the geeky tech entrepreneur and the all-powerful venture capitalist. The lesson we all learned was that an idea could quickly move from concept to a reality – potentially unleashing millions of dollars while doing so. Of course in the process, numerous shaky business plans were funded; people saw value where there was just wind. Yet, tech entrepreneur/VC tandem survived the bubble and still embodies in our subconscious the perfect combination to generate technology innovation.

As a consequence, people still believe that this is the model to go for the next technology innovation. That is why, you see cleantech entrepreneurs and VC striving to walk the cleantech “revolution” along the same path i.e. funding, IPO, etc. However, savvy investors and business pundits raise some valid concerns as to the validity of the analogy. The beauty of the IT revolution was, and still is, that the development costs to reach scale are very limited. On the contrary, most of the cleantech requires longer development lead time and thus funding up to 10 times what was necessary for the proof of concept in the IT world. How many firms can realistically raise 100 million of dollars through the VC world to develop a conclusive prototype? The analogy falls short and begs for another point of reference. Read the rest of this entry »

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The future of fuels – Biofuels

20 01 2010

Source: treehugger.com

Ethanol and other biofuels have come under a lot of heat especially during the 2008 food crisis as most of them are derived from alimentary crops like corn (US), sugar cane (Brazil) and palm oil (Malaysia and Indonesia). It is almost commonly accepted that to become a sustainable part of energy portfolio new technologies will have to come online – the infamous second generation biofuels (e.g. made out of cellulose).

Governments have high hopes for renewable fuels for both strategic and environmental reasons. That’s why countries like the US establish very ambitious mandates like the Energy Independence and Security Act of 2007. This regulation stipulates that by 2022 about a fourth of the daily demand of gasoline (total demand ˜400 million gallons) comes from renewable resources.

While this number is great news to stimulate technological innovation in second-generation fuels, a more pragmatic look at the future reveals some tough (yet surmountable) hurdles ahead. I don’t think I have much to add to the real challenges technology wise, so let’s pretend that we manage to secure ˜100 million gallon of renewable fuel per day. In addition, I will not get into the wells-to-wheels controversy as to whether biofuels are actually beneficial as a whole or not. Allow me to focus instead on operations, as I think it is an issue too often overlooked in the biofuels debate. Read the rest of this entry »