Venture capitalists have been sinking a lot of cash into alternative energy and clean technology start-ups in the past few years. $727 million was invested in 2006 alone, which was up from $195 million in 2005.

However, these venture capitalists are finding that in order for their new alternative energy businesses to grow and thrive they’re going to need a little help from state and federal governments. This means trying to influence politicians - not an easy task considering they’re going up against big oil companies that have been heavily lobbying the government for years. In 2005, oil and gas company lobbyists spent $59 million, whereas venture capitalists spent $2 million.

The president’s State of the Union address called for an increase in domestic fuel production including ethanol and biodiesel, which is promising for those who have invested in the production of these fuels. And states across the US are increasingly making climate change and related issues priority item.

The increase in venture capital funds for alternative energy and clean technologies are also having a positive impact on job growth in silicon valley.

Venture capitalists are often entrepreneurial and typically invest in young companies, or assist in product development and with the intent of getting a high rate of return on their investment within three to seven years. Alternative energy investments include funding for companies in solar and wind technologies, and alternative fuels such as ethanol and biodiesel.

Via The New York Times

Further reading:
National Venture Capital Association

Cleantech Venture Network