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VC Investments in Clean-tech Hold Steady

Critics who question the future of clean technology and our government’s investment in the industry’s future might have to admit they’re wrong, once and for all.

Here’s a little bit of news for them from the New York Times’ Green Inc.: Venture capitalists invested $5.6 billion in green technology companies worldwide last year, according to a preliminary report from the Cleantech Group and Deloitte.

VC firms don’t spend that kind of cash on pipe dreams, particularly in today’s economy.

Although the report reflects a 33 percent drop from 2008 investments, the overall amount of venture capital fell further, to 2003 levels. But clean technology investments matched those from 2007, indicating a steady hold amid a global economic downturn.

Dallas Kachan, managing director of the Cleantech Group, said: “In 2009, clean-tech went from a niche category to become the dominant category in venture capital investing. Clean-tech continued to outpace software and biotech.”

Certainly, as the Green Inc. post points out, government subsidies are key. The clean-tech industry has experienced significant growth in recent months and analysts predict an ongoing upward trend due in large part to the Department of Energy’s $36.7 billion in stimulus funds.

As it turns out, NSI secured part of those funds for VC-backed companies Power Assure and SeaMicro, both of which develop data management products that increase energy efficiency. With help from premier investors in Silicon Valley, the startups leveraged that funding for NSI consultants’ strategy and oversight to win $14 million in grants from the DOE.

Power Assure reduces data centers’ energy consumption by an average of 50 percent, helping companies meet energy reduction targets and regulatory requirements, according to a company press release announcing the DOE grant. In fact, the DOE award was granted to Power Assure based on its principal goal of transforming data center energy strategy from an “Always On” to an “Always Available” model, which dramatically increases the efficiency of data centers. The root cause of high fixed energy expenses in data centers, according to the release, is that they are built to remain “always on”, consuming their full power load regardless of user demand.

In a press release announcing the project grants, DOE Secretary Steven Chu said, “By reducing energy use and energy costs for the IT and telecommunications industries, this funding will help create jobs and ensure the sector remains competitive. The expected growth of these industries means that new technologies adopted today will yield benefits for many years to come.”

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