Changing Energy Industry Forces Whiz Kids to Wait and Learn
WASHINGTON D.C. — Armed with post-Zuckerberg drive to start a company as soon as they pass freshman English, as well as a belief that climate change poses the world's greatest challenge, today's undergrads look to the energy sector as the place to make their precocious mark. However, due to the complexity of the dominant fields in the alternative-energy industry, these kids may have to wait until they are old enough to legally buy a drink before they are ready to court venture capital or found their own company.
Speaking at the start of the ARPA-E Energy Innovation Summit here yesterday (Feb. 28), a panel of venture capitalists and university technology-transfer officers bemoaned the fact that, unlike software development or social networking , the energy industry isn't a young person's game. Young people are closed off from solar cell development or battery technology. However, they have found success in the smart grid software and energy conservation fields that make present technology more green.
"I'm not sure if, in the energy world, materials will come out of the undergrad realm. Smart-grid software could, but I think it just takes longer to get the knowledge and see where the developments will be," said Throop Wilder, the president and chief executive of 24M Technologies, and a seasoned venture capitalist. "It's totally different in software, the amount of experience. A 10-year-old can learn simple programming, but 10-year-olds aren't building batteries ."
There are two main barriers to university undergraduate programs producing the energy equivalent of Facebook, said Dhiraj Malkani, the principal at RockPort Capital. First, the materials chemistry knowledge that underpins the development of new solar cells and batteries requires decades to master. Second, unlike the software field, where one or two people can produce a useful product, energy companies require large, investment-intensive interdisciplinary teams. Undergraduates rarely can assemble them, and venture capitalists would find it too risky even if they did.
While those hurdles all but preclude a pair of dorm buddies from revolutionizing the future of energy, venture capitalists are also interested in undergrad projects that make current inventions more green.
Levant Power, for instance, began as the work of two MIT undergraduate students and became its own well-funded entity, Malkani told InnovationNewsDaily. The company produces shock absorbers for cars and trucks that turn the vehicle's suspension system into a power source, greatly increasing gas efficiency.
Smart-grid tech, which increases the efficiency of electricity use by routing power to appliances only when they need it, can catapult undergrads directly into the business world, Wilder told InnovationNewsDaily. Since the energy savings of smart-grid technology come primarily from software, those startups behave more like VC-friendly social networking companies than capital-intensive energy materials companies.
Another difference between the energy field and the software field actually works to undergraduates' benefit. Whereas mathematicians and computer programmers often do their best work as young people, few people in the energy world make a splash until they have experience on both the industrial and the academic sides, Wilder said. The difficulty of forming an energy startup forces undergraduates to get that multifaceted experience.
"You can get far enough in undergrad to know there are opportunities," Wilder said. "But you need industrial experience to know where those opportunities are."
The ARPA-E (Advanced Research Projects Agency-Energy) summit runs through March 2.