Funding becoming harder to get for green startups

Saving the planet is looking a lot less profitable than it was a few months ago, and investors once enamored with finding the next high-flying alternative energy startup are retrenching.

Venture capitalists poured a record number of dollars into alternative energy companies as oil prices peaked at $147 in the third quarter, but some say that investment has trailed off substantially as crude prices declined and the global economy has slipped toward recession.

Not only are venture firms demanding lower valuations for what they call "cleantech" companies, they are also shying away from those with riskier technologies and startups whose business plans will require large amounts of capital.

"Our standard of investment has always been high, but it's even higher now," said Bryant Tong, managing director with San Francisco-based Nth Power, a venture capital firm that invests in energy technology startups.

"Investors are hesitant to make investments... so it is harder across the board to raise capital for these companies."

Alternative energy in the last few years has become a major focus for venture capitalists, who saw there was money to be made from investing in technology to create cheaper solar panels, clean transportation fuels and green building products at a time of increased concerns about global warming and soaring fossil fuel prices.

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Source: Reuters