Crisis is the Perfect Opportunity for Innovation

You’re an entrepreneur and you’ve got a great new business model or technology that you want to share with the world. Unfortunately, the present economic climate has got you thinking more about a second job flipping hamburgers than raising venture capital.

But now might be the best time to dust that idea off, bring your team together and start pitching investors. If your idea is a good one, that is. ::continue::

A group of leading venture investors gathered today at the Renewable Energy Finance forum with a simple message to cleantech entrepreneurs: The venture community is still in business.

“For anyone who’s been investing in this for a while, we all know this is a renaissance time for the cleantech sector,” said Ira Ehrenpreis from the firm Technology Partners. “There’s nothing ‘worst times’ about it. We wake up excited everyday for the markets we are in. This is not an obscure area anymore.”

He and the other panelists admitted that many venture capital firms are being extra cautious and deploying funds with more mature companies. But that should not deter anyone from pitching a great idea.

“When you swing for the fences and take that extra risk, you actually move this market much faster,” said Stephan Dolezalek, a partner with VantagePoint Venture Partners. “We need to be careful about being too bold – but mostly it’s about not being bold enough. We need to keep swinging for the fences, so to speak.”

Unfortunately, firms have generally not been swinging for the fences. Since last October, venture investments have been half of what they were for the preceding two years. Also, later-stage investors are even more wary about touching a company’s first or second project. This has extended the so-called “valley of death” between technology demonstration and deployment.

Those factors have had a palpable effect on the health of start-up companies. However, the current economic crisis should be looked at as a chance for more innovation, not less.

Governments are treating renewables and energy efficiency as a way to clean up the mess we’re in, thus creating a more favorable policy environment. Also, the new-found conservatism will make it less likely that bad ideas get funded and more likely that the best ideas rise to the top.

The global mega-trends for clean energy like climate change, energy security and energy poverty, are so large, said Ehrenpreis, there will be room for many different ideas. Rather than staying away, now could possibly be the time to approach the market.

“Cleantech is the third leg of the stool along with IT and Life Sciences,” he said. “There is so much room for innovation – the space is far from crowded. We need more of it.”

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I am a reporter with, a blog published by the Center for American Progress. I am former editor and producer for, where I contributed stories and hosted the Inside Renewable Energy Podcast. Keep in touch through twitter! My profile name is: Stphn_Lacey

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