The Swine Line

Today’s WSJ Online points out ($) that many of the private-sector entrepreneurs, those mad-cap, high-flying, risk-taking venture capiltalists, are backing companies who aim to solve our so-called “global warming crisis” are really all about climbing on the federal subsidy bandwagon, getting in on the ground floor of federal handouts for unproven and, so far unprofitable, technologies.  I guess the venture capitalists have taken a lesson from the ethanol industry (more here and here) and how it has managed to subsist almost exclusively on a steady diet of government subsidies.  Oh, and the WSJ article also details that our Internet-inventing, Oscar Award-winning former VP, Al Gore, was recently named to the board of one of these cutting-edge companies, which has seized the opportunity, or at least recognized the earmarked provisions in the appropriations bills, and is running with it.  Here is the gist, but read it all:

There’s no shortage of new capital pouring into alternative energy projects these days. According to the National Venture Capital Association, “clean tech” start-ups attracted more than $800 million in venture capital last quarter, a new record. What’s not clear is whether these are fundamentally energy ventures or political
ventures. The Manhattan Institute’s Peter Huber, a former engineering professor at MIT, exaggerates only slightly when he says that “Basically, ‘alternative’ means stuff that nobody actually uses.” If that turns out to be true, then alternative energy companies could struggle for market share without government assistance.

Those doubts exist even for the companies backed by Kleiner Perkins. After making more than a dozen “green tech” investments, Kleiner is still waiting for its first exit. According to a Kleiner spokeswoman, many companies in its portfolio are “in stealth mode.” The firm will “neither name nor comment on them.” So it’s impossible to determine precisely how much the Kleiner-backed firms will benefit from either current federal subsidies, or new provisions that are part of the House and Senate versions of the stalled energy bill. But we do have some hints.

Of the portfolio companies acknowledged publicly by Kleiner, at least two, Altra and Mascoma, are involved in the production of ethanol, which is already heavily subsidized and would get more subsidies in the House bill and higher mandates in the Senate version. A third firm in the portfolio, Amyris Biotechnologies, is developing a biofuel that will provide “more energy than ethanol,” according to its Web site, and should be just as eligible for government set-asides.