After writing about First Solar recently for Seeking Alpha, a commenter wrote that I should check out a company called SHEC Energy. “They have innovations that look like game changers,” the comment read.
So far SHEC has signed alliances with Giffels Associates, Clean 16 Environmental Technologies, and the University of Toronto. It has put together a management team. It has a pretty Web site and has designed a product.
Notice anything missing?
That’s right. Sales. Products. Stuff working in the field. Customers.
There are many companies like SHEC all over the “solar patch,” as I’m calling it. (If oil companies can work in the oil patch, then solar companies can work in the solar patch.) They remind me of a lot of the wildcatters who used to hang out at Texas bars back in the 1920s. They are all hat and no cattle.
Revolutionary designs and concepts are everywhere in the solar patch. Some are bound to work. Many entrepreneurs, either because they’re not getting a hearing or want to run their own shows, are going to seek non-traditional capital – penny stocks, patent license deals, publicity tools touting what can’t be shown.
It’s even possible one or more of these deals will work out, that someone will come out of nowhere with a revolutionary product that will make their early backers a fortune.
If you’re into that, enjoy yourself. I like a good technology yarn as much as the next fellow. More, in fact.
Just don’t look to John Q. Public as your primary investor. Public investors are not venture capitalists (VCs). We should not be expected to become venture capitalists.
VCs are about more than money. They’re about expertise – financial expertise, engineering expertise, management expertise, marketing expertise. They know how to evaluate promising ideas, turn the best into working products, and extract the most value possible from them. And still, they often fail.
I have too much respect for the work venture capitalists do to ever pretend to be one, by recommending investments in ideas that have yet to prove themselves in the marketplace.
Extraordinary claims demand extraordinary proof. Remember that when you read about a renewable energy “breakthrough” from some company you’ve never heard of — like SHEC Energy. Such proof may one day be forthcoming. But until you see it, hold close to your wallet.