Alternative Energy Entices Venture Capital

NJBIZ, Jul 30, 2007

Industry Report

GIVEN THE STIR created by the July 7 Live Earth concerts calling attention to the problem of global climate change, it's no surprise that venture capitalists are paying close attention to companies with new ideas for sustainable energy. "I think the alternative energy sector has been getting a lot of interest in dollars," says Jim Gunton, general partner of NJTC Venture Fund in Mount Laurel. "That would encompass the solar sector and bio-diesel, and wind to a lesser extent."

The shrinking supply of carbon-based fuels and growing evidence of the environmental damage they cause has pushed companies with possible solutions into the limelight. "With the high cost of gas, the cost of electricity going up, global warming and the trouble in the Middle East, there's just a lot of desire in a pretty broad way to invest in alternative energy," says Gunton.

Other sectors are also catching the eye of venture capitalists. "With the state's investment in stem cell research, I think in a few years we will see innovations that can be commercialized," Gunton says. "And cyclically speaking, it wouldn't surprise me if in a couple of years you see telecommunications come back. It's been kind of downtrodden for a while." In addition, he says, nanotechnology and new advances for the Web are likely to attract future investors.

"It's a very active time" for venture capital, says Gunton. "The exit markets are starting to heat up a bit more, especially for some of the later-stage companies. They are getting a lot more competing interests to buy shares in their companies."

At the same time, he notes, early-stage companies may still have to struggle for cash to move forward. "There continues to be a need for more money in that category," he says. "It's something of a chronic need."

Despite the widespread public interest in health care, he adds, investors are currently looking in other directions. "Health care in a broad way is not as much of a thing at the moment," he says. "People seem to be more interested in things like alternative energy."

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