[SoothSayer]

Every year I attend a 2-day Venture Capital conference in the UK.

It's an event where attendees are given a series of 15-minute "elevator pitches" by hi tech companies seeking investment from "business angels"

Normally I don't speak to other attendees - it's not that sort of event.

However this year I did chat to my neighbour whilst we waited for a late arrival presentation.

It turned out that, unlike most attendees, he was not a "business angel" but was the investment manager for a VC fund. He had just invested in a biotechnology venture and was full of enthusiasm.

I expressed caution about the return on energy inputs for bio fuels ... he had no idea that this might be an issue.

I then mentioned Peak Oil ... he had no idea of what it was.

He took copius notes whilst I spoke to him ... I suspect that the CEO of his latest startup will get a bit of a grilling!

More generally, how can some major VC funds be unaware of Peak Oil, EROEI etc?

They need not believe in PO - but they should certainly be aware of the theory.

(Not a single presentation that I saw was energy conservation or PO related ... a bit disappointing)

[rogerhb]

$this->bbcode_second_pass_quote('', 'N')ot a single presentation that I saw was energy conservation or PO related ... a bit disappointing

[lutherquick]

Well, the US gov is the biggest VC fund. One of the real big projects, is called "Iraq", how is it they got that so wrong?

One time I worked for a start up, and they showed a demo to some VC folks, and claimed the demo was their own development. Turns out, the VC never did an audit... and that start up simply changed a few logos and called it their own, they had no source code... Regardless, the VC funded the venture...

VC funds use terminology like "diligence", this is the magic word for getting deep into some potential investment and make sure it's real and viable. Yet, they don't. The dot com bust was not because too much money was pumped into Internet technologies, it was a bust because so many VC did not do their diligence. I call it fraud, but they call it risk.

I guess a big pile of money will go into VC backed renewables. People will count buzz words, and index phrases, they will NOT "think" nor do their homework, the reason is in the culture. Too much of the American economy, too many of the business plans should have failed had energy been expensive. Much of Americans economics will fail as energy becomes expensive because so much is based on excess and assumes commodities are dirt cheap. This thinking, is engrained deep into VC protocol. They don't look at fundamentals... As long as cash flow goes up, within a certain time line, within a certain performance, then they are go. Very little in American business is designed for long term performance, because all of it assumed cheap energy.

Regardless, everyone should try like hell to avoid VC funding. You end up prostituting yourself.

[untothislast]

$this->bbcode_second_pass_quote('rogerhb', '')$this->bbcode_second_pass_quote('', 'N')ot a single presentation that I saw was energy conservation or PO related ... a bit disappointing

[SoothSayer]

4. Should radical policy changes be introduced, it's only because someone, somewhere, has worked out a way to make money out of it.

Perhaps this is our only hope?

Capitalism COULD come the rescue at some point. At least, that's what it is supposed to do!

We could experience a dot-com boom in eco science ... hopefully in time!

[untothislast]

$this->bbcode_second_pass_quote('SoothSayer', '
')Capitalism COULD come the rescue at some point. At least, that's what it is supposed to do!

[pea-jay]

I think the problem boils down to a flawed understanding of economics. I blame the field itself. I was an Econ minor in college and my wife has taught it at the HS level. The problem boils down to study of economics focuses on the HUMAN aspects of the economy (think labor/capital now) focusing on flows between consumers-businesses and the government. The environment is an afterthought. It WILL provide whatever resources demanded of it while absorbing all of the wastes. Look at the flows in your average text, theyre linear. This presumes the economy operates in a limitless environment and teaches those studying the subject to base their beliefs on such an arrangement. It then presupposes an idea that even if commodity costs rise too high, new production will be spurred onto the market and/or viable substitutes will be offered up instead. This is the theory. Most dont think beyond this and divorce the natural environment from the economy and thus encourage us to do the things that we have always done if for no other reason than it worked in the past.

Economics is not a hard science, yet it is given deference over the hard sciences. Physics and biology may make it clear that biofuels will not power the future. Economics (and politics) will dictate that funds be expended to try and break those assertions.

The result: most "trained" economic individuals lack the basic tools to comprehend what peak oil means to civilization.

[SoothSayer]

$this->bbcode_second_pass_quote('untothislast', '')$this->bbcode_second_pass_quote('SoothSayer', '
')Capitalism COULD come the rescue at some point. At least, that's what it is supposed to do!

[untothislast]

$this->bbcode_second_pass_quote('pea-jay', 'T')he result: most "trained" economic individuals lack the basic tools to comprehend what peak oil means to civilization.

[SoothSayer]

$this->bbcode_second_pass_quote('untothislast', '')$this->bbcode_second_pass_quote('pea-jay', 'T')he result: most "trained" economic individuals lack the basic tools to comprehend what peak oil means to civilization.

[jaws]

$this->bbcode_second_pass_quote('SoothSayer', '[')i]Brown, the G-7's longest-serving finance minister, said last week he would attend the meeting with a 'five-point plan' that includes a call for producers to pump more oil and to be more open about crude reserves."

22 Sept 2005

Errr ... a firm grasp of Peak Oil there ...

[gg3]

What about this: HRH the Prince of Wales is set to become the next King of England. He is highly aware of global climate & ecological issues, so it's reasonable to assume he's also aware of PO. He's already been active around the world, and has introduced a number of measures in a town (the name of which escapes me) for which he was direct responsibility. So I have to believe that as King of England he will continue on this path and will be able to have even greater impact. Question is, whether an activist King in the 21st century will be able to move enough of the voters to make a difference in the election of the Parliament?

---

Re. VC: Oh it's quite possible to make money on conservation and sustainable technologies generally. Most of this involves contracting firms and other such small business categories that are not amenable to the VC model, which depends on assumptions about growth and exit strategies that lead to 40% ROE within a five-year timeline.

What VCs are probably looking for is some kind of breakthrough technology, but at this stage, that is more likely to come from an established corporation such as GE, Matsushita, or Siemens, or a mature but smaller entity such as Vestas Wind.

Re. the internet days: yes, how well I remember learning that many dotcom biz plans were pure BS for the sake of giving aspiring executives a hands-on educational experience at the expense of investors. At the time I recall saying that was one click away from outright fraud.

Our American readers may appreciate the following. To the tune of the Marshmallow Fluff "Fluffernutter" jingle (which can be found here, click on the "Fluffernutter Theme":
http://www.marshmallowfluff.com/pages/f ... utter.html )

Oh you need fluff, fluff, fluff!
to make a Netter-Fluffer
Internet Fluff! and lots of graphic clutter!

First you spread, spread, spread,
some jargon as a buffer,
add Internet Fluff, and that's a Netter-Fluffer!

So enjoy-joy-joy, until the times get tougher
Then sell your founders' shares,
and go out and start another!

[rogerhb]

$this->bbcode_second_pass_quote('gg3', 'H')RH the Prince of Wales is set to become the next King of England.

[rwwff]

$this->bbcode_second_pass_quote('rogerhb', '')$this->bbcode_second_pass_quote('gg3', 'H')RH the Prince of Wales is set to become the next King of England.

[rogerhb]

$this->bbcode_second_pass_quote('rwwff', 'I')'ve always wondered if the various holders of the office of Speaker of the US House of Representives don't go to bed sometimes thinking, "In any other democracy in the world, I'd be effin in charge!"

[rwwff]

$this->bbcode_second_pass_quote('rogerhb', '')$this->bbcode_second_pass_quote('rwwff', 'I')'ve always wondered if the various holders of the office of Speaker of the US House of Representives don't go to bed sometimes thinking, "In any other democracy in the world, I'd be effin in charge!"

[gg3]

I'm well aware that the British Monarch does not have legal power as a ruler; I was thinking in terms of cultural influence.

I'm also glad that in the US system, we can have the executive and legislative branches led by different parties. A Republican President and a Democratic Congress, or vice-versa, is a negative feedback system that prevents the worst sorts of excesses. The present one-party state has so far led to a national debt in the multiple trillion dollar range, and social programs such as a quarter-billion-dollar bridge to an island in Alaska that is home to all of fifty families. Spending the country down the toilet while scaring people with images of gay people getting married (and I thought monogamy was supposed to be a virtue?) and Mexicans invading from the south.

Anyway, back to capitalism, VC and otherwise....

I wonder about this. The VC model is based on 5-year growth to exit, and 40% ROE. What about another model that could work for a "limits to growth" world...?

What I'm thinking of, is something like capitalism on a local or relocalized model. Investors in a company would be local folks who buy in for the long term, to earn their returns in the form of dividends rather than speculative gains in share prices. Think of something like a stock market on a city or county scale, perhaps handled by local banks.

At present, selling stock is controlled by various SEC regulations that impose absolutely enormous paperwork & compliance burdens on companies. Even a small company typically needs a full-time employee to do nothing but that paperwork. (I'm controling my urge to go on a libertarian rant about this...)

There is a very limited mechanism for selling shares outside of that mechanism, called a "Regulation D offering" if I'm not mistaken (I've been involved with one of these in the past, could go look up my notes...). However this is limited in terms of the amount of money it can raise and the number of shareholders who can become involved. Basically it's a mechanism for raising seed funding for initial operations, on the assumption that the company is heading toward going public in the normal sense, SEC compliance and cubic yards of paperwork included.

But what about this: a "community stock offering" that enables sales of shares within defined communities-of-interest? This is also "going public" but on a localized scale. A community of interst might include one's geographic community (city or county), one's professional community (people in the same field, for example geekdom), and/or other definable constituencies that were demonstrably capable of evaluating a business plan and/or the persons involved in it. SEC filing requirements should be minimal: the kind of stuff that a part-time bookkeeper could produce and a CPA could examine. Perhaps also an independent yearly audit to be sure.

For a similar example, look at credit unions: member-owned financial institutions that are limited to defined communities-of-interest. They certainly provide value to their members, they also give conventional banks a good competitive nudge, and they rarely if ever have scandals of the type that were common in the S&L industry.

The community stock offering mechanism could very well be used for instances such as the local contractor who does conservation retrofits and solar installations, the local producer of electric vehicles (hey Toecutter), and so on. In cases of this type, what you typically have is growth up to some defined maturation point, and hold-steady from there forward. Business plans would define these points on the timeline and forecast dividends. Investors would be looking for sustained value, i.e. safe conservative investments that pay off over the long haul.

To my mind there is something very appealing about all of this, though I'll also admit to a bias in favor of diversification of ownership models, of which this is one case in point. There is also something appealing about average people being able to get more directly involved in the mechanisms of capitalism. And there is the perennial question of how to sustain a free enterprise economy in a no-growth world, for which this may provide a partial answer.

[rogerhb]

Remember the original role of corporations? Time limited and for the public good?

[Chaparral]

$this->bbcode_second_pass_quote('rogerhb', 'R')emember the original role of corporations? Time limited and for the public good?

[NeoPeasant]

$this->bbcode_second_pass_quote('gg3', 'W')hat about this: HRH the Prince of Wales is set to become the next King of England. He is highly aware of global climate & ecological issues, so it's reasonable to assume he's also aware of PO.