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STRATEGY

Opportunity Knocks

With technology markets tanking, what's the next big thing?
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Tomorrow's Entrepreneur

Nine years ago, Nancy Floyd decided to create a venture-capital fund to invest in energy-related start-ups. She visited 197 companies around the world looking for investors. It took her nearly five years to raise $65 million from the nine companies that ultimately decided to invest in her fund, dubbed Nth Power Technologies. Last year, by contrast, Floyd and her partners raised a second fund of $125 million in "no time at all," she says.

Why the sudden interest? Deregulation of the energy market and the growth of the digital economy have drawn investors to the sector, says Floyd. As entrepreneurs and investors have come to realize that worldwide energy markets are valued in the hundreds of billions of dollars, the number of innovative energy-related start-ups has shot up. Many of those companies focus on distributed generation, which means using small on-site power sources rather than a central plant. Floyd sees promising companies addressing these energy questions: How can we provide alternative power to supplement the existing energy grid? And how can we conserve energy to keep energy costs down?

Of course, such questions have a multitude of potential answers. What's striking about the energy-related field is how diverse it is and how many technologies entrepreneurs are already pursuing. Here's a sampling of some of those efforts, provided by the industry newsletter New Energy Report.

Alternative fuel
The technology: processes that make fuel from existing resources.

  • Blacklight Power Inc. uses hydrogen to generate power, light, and new chemical substances.
  • Earthfirst Technologies Inc. produces clean-burning fuel called "MagneGas" from contaminated water or sewage, and can produce irrigation-grade water in the process.
  • Dynamotive produces clean-burning fuel from agricultural waste.
  • Solar Energy Limited uses solar power to produce hydrogen from burning coal and a clean-burning fuel from the atmosphere's carbon dioxide, with electricity and oxygen as by-products.
  • Hydro Environmental Resources Inc. uses water and a "secret ingredient" to create electricity, heat, distilled water, and hydrogen.

Photovoltaics and fuel cells
The technology: photovoltaic systems that convert solar energy directly into electricity and fuel cells that act like small generators, producing electricity using materials such as hydrogen and oxygen.

  • PowerLight Corp. (#186 on the 2000 Inc. 500) designs, manufactures, and installs commercial photovoltaic systems that are connected to the power grid.
  • Trimol Group Inc. produces fuel cells that generate power through a chemical reaction between aluminum and oxygen.
  • Millennium Cell Inc. makes fuel cells and batteries and generates hydrogen or electric power from environmentally friendly materials.

Turbines
The technology: energy-generating turbines that are powered by wind, steam, or flywheels.

  • Southwest Windpower Inc. manufactures and markets small wind turbines suitable for producing electric power for homes, ranches, sailboats, and telecommunications.
  • Capstone Turbine Corp. produces low-emission microturbines fueled by natural gas.
  • Ocean Power Corp. works with Stirling engines, external combustion engines that may be more efficient than steam turbines are for water desalinization.
  • Satcon Technology Corp. manufactures and distributes fuel cells and power-generating systems.
  • Beacon power corp., a subsidiary of SatCon, manufactures and distributes flywheels (small mechanical systems that store electricity and serve as generators in the event of a power outage) as an alternative to batteries for energy storage.

Conservation
The technology: saving energy in home or commercial settings.

  • Spectrum Technology Corp. has developed an energy-conserving water-desalinization process using lasers to purify seawater. It also has developed a fuel cell using hydrogen, oxygen, and deuterium.
  • SolarAttic Inc. recovers heat from home attics to use in heating domestic hot water and swimming pools, and for space heating.
  • Silicon Energy Corp. develops and sells Web-enabled software that allows businesses to monitor and adjust power usage remotely.
  • Real Goods Trading Corp. retails and installs wind turbines and photovoltaic systems and also sells ecologically sustainable products.

The 2001 State of Small Business issue


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