Around this time last year, some of San Diego's technology sector leaders announced the creation of a nonprofit trade group aimed at fostering an environmentally friendly business cluster in the region.
CleanTECH, as the trade group is called, was started with the help of some local companies and incubated by Connect, San Diego’s business and technology accelerator. It is designed to nurture and accelerate the growth of companies with environmentally friendly technologies, and foster sustainable development and green enterprises.
This, according to some experts at the Biotechnology International Convention (BIO), happening this week at the San Diego Convention Center, was a prescient idea.
Marianne Wu, of the Bay Area firm Mohr Davidson Ventures, said that investment in clean-tech companies, such as biofuels and solar power, rose 124 percent between 2005 and 2006.
It jumped up an additional 43 percent between 2006 and 2007.
“There’s so much interest in clean tech, particularly clean tech with respect to the venture-capital community today,” Wu said during a discussion session at BIO. “It’s really the re-invigoration of the industrial economy with new technology."
Wu attributed venture capitalists' embrace of clean technology largely to the rising costs of commodities. Oil and food have skyrocketed, and those two sectors -- especially oil -- have affected the costs of everything. People are looking for alternative sources of energy.
Also, more people are embracing environmentally-favorable practices in their everyday lives. And major companies such as Wal-Mart (NYSE: WMT and GE (NYSE: GE) have invested in “green” projects.
This means there is now, more than ever, a market for clean-technology companies.
One such company is Yulex, a Phoenix-based company that makes natural rubber from a desert plant called guayule. Pronounced you-WELL-ee, the plant is native to the American Southwest, and it’s a source of both rubber and biofuel.
The company’s biggest triumph so far is making latex products out of the guayule rubber, which can be used by people with latex allergies. Latex allergies are especially problematic in the health care industry, since doctors and nurses must wear gloves, but anywhere from 10 percent to 20 percent of people are allergic to latex.
“Everyone likes to hear about the green and the clean story. It’s a great story,” said Jeffrey Martin, president and CEO of Yulex. “But unless there’s efficiencies and benefits -- and since these are venture-backed companies -- unless we can make a profit, it all goes away.”
Wu said having a readily marketable product, and an accessible supply chain to make that product, are both keys to a successful clean technology venture.
“Typically a startup can do one thing well, and it should be looking to do that one thing well in a large market opportunity,” Wu said.
Yulex has been a success story so far, but Martin said they struggled to get funding at first, largely because investors were afraid of investing in a brand-new crop.
Martin said the company’s first investors were farmers who saw it wouldn’t be that hard to grow.
The guayule, luckily for Yulex, doesn’t need much water or fertilizer. But Wu said that is one drawback of biofuels: Investors are wary of anything that’s going to be land-and water-intensive.
“We are still very, very early in this,” she said.
Send your thoughts and comments to email@example.com.