Venture capitalists are all getting on the same train again. This time, it’s the smart grid express.
Ask a VC where today’s big clean-tech investment opportunity is and the answer is likely to be “smart grid” – short hand for notion that the creaky old power grid can be updated with technologies to permit greater control, stability, monitoring and conservation.
VCs see copycat companies being created
Tens of billions of dollars of grid spending will take place over the next few years. Some researchers estimate the U.S. market could reach $100 billion a year in two decades.
Venture capitalists are eager to profit. Unfortunately, their excitement is swamping startups with cash, even as overall venture investing shrinks because of the downturn. Some of the dollars are creating copycat companies, raising the level of competition that each will face.
Now the dreaded word “bubble” is starting to be heard. This turned out to be particularly true at the AlwaysOn GoingGreen conference Wednesday in Sausalito.
The prospect of over investing could spell trouble for unsuspecting entrepreneurs determined to capitalize on the market opportunities. Already the list of startups is long, with names such as Tendril, BPL Global, Enerwise, SmartSynch, Silver Spring Networks, eMeter, Itron and Eka Systems.
But that isn’t the end of the challenges. What should scare startup CEOs the most is that the big money is drawing all sorts of giants, Siemens, Cisco, General Electric and IBM, to name a few. Just this morning IBM added more software to its product arsenal, a program called Solution Architecture for Energy and Utilities Framework, or SAFE.
For many young companies, the prospect of too much competition is anything but safe. In fact, as one VC put it, it is time to look for protected market niches.
