Look Out, Cleantech VCs: Oil's Got a Leg Up On Energy

Neal Dikeman, CEO of Carbonflow and a partner at Jane Capital, offered up some impassioned words of wisdom for the optimistic cleantech VCs in Silicon Valley over at the Cleantech Blog yesterday: For all the talk of a green boom in the midst of the downturn, don’t expect just any cleantech investment to survive.

His advice was largely to heed the warning contained in the old tortoise-and-the-hare fable: When pitted against the foolish and fast, slow and steady wins the race. Most of today’s hottest cleantech categories are energy related, and Dikeman points out that energy is an old, complex, global business that few entrepreneurs are well-positioned to either understand or navigate:

Beware Silicon Valley, the great fortunes, wars, and economic crises of the world for 100 years are not technology ones, they were energy made. Half the schools you went to were built by oil money. And the entreprenuerial spirit in this industry was born in the hardscrabble oilfields of Pennsylvania and Texas, and grew up in the far reaches of the globe. And the oil companies those entrepreneurs founded have forgotten more about technology in energy than you even know existed.

Dikeman, who is a friend of mine, has often lectured me that the big oil companies are in a better position to evaluate and invest in emerging technologies than venture capitalists — their pockets are deeper, they have in-house experts and they understand the supply chain. And as a result of all these things, they’re able to be more patient. (One of his favorite examples is the low-profile ConocoPhilips, to which he is an adviser.)

For the blog, he put it more bluntly:

Be forewarned, you do not have a comparative advantage here. The oil men invented risk taking, AND risk management. The oil men are bigger, faster, smarter, richer, have more scientists and more entreprenuerial spirit than you, AND they know energy.

While Dikeman may like to razz the VC community, he does so for the benefit of VC-funded startups: “The little guys whose pension funds are paying you a cushy 10-year guaranteed contract are counting on you to put aside your hubris.”

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