March 21, 2006

Calif. contest seeks “clean” technology plans

By Eric Auchard and Leonard Anderson

SAN FRANCISCO (Reuters) - An alliance of Silicon Valley
venture capitalists has joined forces with California energy
companies and universities to identifying "clean technology"
business start-ups.

The aim of the "Clean Tech Open" competition is to jump
start a state industry with the entrepreneurial drive of the
computer and biotechnology sectors, freeing energy investment
from relying on sky-high oil prices and government subsidies.

Winners of the business plan competition stand to receive a
year of free office space, legal and accounting advice,
publicity and capital to turn ideas in five categories into
stand-alone businesses within the state.

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

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

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. Five runner-ups
will receive support services for a year and $50,000 each.

"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."

Marking the growing commitment to clean technologies,
Draper Fisher is set to close over the next 60 days a $200
million clean technology fund, called DFJ Element -- marking
one of the biggest venture commitments ever to the sector.

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


Overall, U.S. venture investments in "clean technologies"
totaled an estimated $1.18 billion during 2005, according to a
study by Ernst & Young/Dow Jones VentureOne. In Europe, these
types of investments drew 348 million euros, or $415 million.

Growing venture investment in clean technology is taking
place amid a state regulatory drive to encourage the sector.

The California Public Utilities Commission has directed the
California's investor-owned utilities to develop energy
conservation programs to offset the need for new power plants.

CPUC Commissioner Dian Grueneich told the news conference
that the state's goal is for utilities to spend $2.5 billion
over 10 years on energy efficiencies in order to save utility
customers $5 billion in energy rates.

Utilities are seeking to make renewable energy 20 percent
of total power supplies by 2010 and 33 percent by 2020.

"I think with improvements of technology we can get there,"
Grueneich told business leaders and politicians at the event.

Backers of the statewide business plan competition said
they will select 40 business plans in the first round of the
contest starting in mid-April and 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.

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.