The Challenge of Hydrogen and Fuel Cells
Edited by Stefano Pogutz, Angeloantonio Russo and Paolo Migliavacca
Chapter 8: Financing Fuel Cell Market Development: Exploring the Role of Expectation Dynamics in Venture Capital Investment
Rolf Wüstenhagen, Robert Wuebker, Mary Jean Bürer and Dale Goddard INTRODUCTION The widespread adoption of fuel cell technology depends on a set of actors often neglected in research on the introduction and diffusion of breakthrough innovation: namely, the investors that finance that innovative activity. While policy-makers and scholars have traditionally focused on large, public companies and internal capital markets and their role in the innovation process, a small but growing body of work suggests that this activity may be at its most potent when harnessed to entrepreneurial activity. Research also suggests that venture capital can play an important role in the commercialization of breakthrough sustainable energy technologies – solutions that will reduce dependence on oil and stem the effects of climate change (Moore and Wüstenhagen, 2004; O’Rourke and Parker, 2006; Wüstenhagen and Teppo, 2006). After a slow start, venture capitalists have accelerated investment into promising energy-related ventures. Less than eight years after Diefendorf (2000) examined why the venture-capital community had lost interest in the sustainable energy market, the emerging segment has become the third-largest venture-capital investment category behind software and biotechnology. In 2006, the cleantech sector contained $US 2.6 B (€1.7 B) in invested capital, representing 11% of all venture-capital investment for that year and an increase of 78% over 2005. The growth in investment in 2006 was driven almost entirely by investments in the energy technology sector, within which clean-energy generation (wind, solar, and so on) dominated the other three subsectors, capturing almost 50% of invested...
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