In the 1967 movie The Graduate, 21 year old Ben Braddock (aka Dustin Hoffman) received a famous bit of advice – “there is a great future in plastics.” The line has lived on since, like an insider stock trading joke – however, VC’s would call the character who delivered this line “a master of the obvious.” If plastics would be a big market, how would Hoffman have chosen the application area or the start up company that would win?
So over roughly the last seven years, new market categories within Cleantech have come into vogue with similar, layman speak descriptions – insert your favorite – “there is a great future in….” batteries – biofuels – carbon software – demand response – green building materials – LED’s – smart grid – solar PV – wind, and even water.
What’s stunning is how many of these now visible companies only received their Series A funding in the last few years. Companies like Hara (Series A in 5/2009), Silver Spring (Series A in 4/2008), Solyndra (Series A in 4/2007), Solar Power Partners (Series A in 9/2007) and SunRun (Series A in 6/2008) are all perceived leaders in big market categories, yet they’ve only been in existence for a few years.
Which makes it that much more fun to speculate on the next favorite hot markets. My votes for three new Cleantech categories which will become more visible (ie. early stage funded) in 2010 are: 1. nuclear power, 2. magnetics and 3. waste heat recapture systems.
Nuclear power, because it makes so much sense. In a market where there has been so little new R&D, one can only imagine what could be developed if entrepreneurs were given capital and support. The fun thing about this one is how real green advocates have a conundrum with the benefits and risks. A relevant company would be NuScale, but there are others as well.
Magnetics, because with so many spinning parts in both existing and newer energy systems the math favors reducing friction (ie. operating more efficiently) and lower lifetime maintenance costs. A relevant company might be Synchrony which recently introduced a computer controlled bearing.
And Waste Heat Recovery, because energy efficiency is in vogue and waste heat is becoming a more known, literally, as a waste of energy. Also we can expect, like cogen and fuel cells, these systems will be supported even more heavily with utility incentives going forward.
Oh, and if you want to follow the professionals who write on this stuff look at GreentechMedia with their top 2009 investment list. Or Jeffries Investment bank who speculates how much more $ will flow into Cleantech.