March 21, 2006

Calif. Venture Firms seek ‘Clean’ Technology Plans

By Eric Auchard and Leonard Anderson

SAN FRANCISCO (Reuters) - A group of Silicon Valley venture capitalists said on Tuesday it is joining forces with California universities, think tanks and energy companies to drive commercialization of "clean" energy technologies.

The aim of the alliance is to jump start a new California industry based on the entrepreneurial spirit of the computer and biotechnology sectors, freeing energy investment from dependence on sky-high oil prices and government subsidies.

Supporters are holding a business plan competition to award a year of free office space, legal advice, publicity support and sufficient capital to turn "clean technology" ideas in five categories into stand-alone businesses within the state.

Among the sponsors are venture capital firms Draper Fisher Jurvetson, New Enterprise Associates, Foundation Capital, Venrock Associates, ATV Capital and Chevron Associates, the venture investing arm of Chevron Corp..

Categories include energy efficiency, renewable energy, "smart" power -- using software to more efficiently manage the power grid -- and transportation and water management.

The grand prize of the "Clean Tech Open" business plan competition is $100,000, its backers said at a news conference held at San Francisco's City Hall on Tuesday.

"Most breakthroughs actually come from ideas that may have not been initially identified as related to the problem," Tim Draper, founder and managing director of venture capital firm Draper Fisher, said in an interview ahead of the event.

"But when the price of oil goes as high as it has, it creates a much broader umbrella under which to invest."

Draper's firm counts six investments in energy and clean technology, ranging from solar cells to suppliers of "clean coal" technology for removing pollutants and bio-diesel fuels, batteries and waste remediation services.

U.S. venture capitalists invested an estimated $1.18 billion in "clean tech" investments during 2005, according to a study by Ernst & Young/Dow Jones VentureOne. In Europe, energy and other clean technology investments attracted 348 million euros, or around $415 million, according to the study.

Such investments included funding not just for energy but for biopharmaceuticals, electronics, materials and chemicals and related computer-based technologies.

Backers of the business plan competition said they plan to select 40 business plans in a first round of competition to be completed by late May.

Contestants will then be winnowed down to six over the summer, with a final winner announced by September or October. Runner-ups in the competition will be considered by the venture capital firms for independent investment, sponsors said.

"A lot of our companies have started out in one direction and then have moved into clean technology," Draper said.

Coordinating the competition are the Clean Technology Advisory Council of San Francisco Mayor Gavin Newsom and members of the Northern California alumni club of Massachusetts Institute of Technology.

Research backers include Stanford University; the University of California, Berkeley; Lawrence Berkeley Laboratory, and two private think tanks, the Electric Power Research Institute and SRI International.