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Editorial Good News For Green InnovationBy Victor Bivell One of the less explored issues of the global financial and credit crisis has been its devastating effect on early stage innovative companies, of which Australia has thousands. So it is good news as well as a little surprising to see a large number of early stage cleantech companies on the Australian stock exchange raise capital in recent weeks. It is one thing for the large end of the stock market - if there still is one - to raise new capital as those stocks have well established cash flows and real assets such as CBD real estate. It is very much a higher order of achievement for a company to raise millions in new equity when its only assets are intellectual property and a business plan, and perhaps three quarters of a prototype. Yet the list if such companies to raise new equity recently is quite long. It includes fuel cell developer Ceramic Fuel Cells with $13.4 million, coal seam gas to LNG developer Liquefied Natural Gas $9.5 million, solar cell developer Dyesol $9.4 million, wave energy developer Carnegie Corporation $5.75 million, waste to energy developer AnaeCo $5 million, jatropha plantation and biodiesel developer Mission NewEnergy $5 million, green energy retailer Jackgreen $3.5 million, geothermal energy explorer Hot Rock $2.5 million, solar tower developer EnviroMission US$0.1 million, and cleaner coal commercializer White Energy with a mighty $55 million. All of these companies along with their unsung peers have achieved something that is noteworthy in the best of times and extraordinary in these worst of times. Chaos theory may explain how a butterfly fluttering its wings in Brazil can cause a storm on the other side of the planet. But somehow the image of a pretty butterfly doesn't capture the spirit of the forces unleashed by the global financial crisis. Perhaps vultures getting into a flap in New York and London might be a more apposite metaphor. Either way, recent times have been very tough for innovative companies. First the incoming Rudd government closed the Commercial Ready program. Then the global financial crisis hit and credit came to an end. The IPO window slammed shut. Venture capital funds did what they always do in hard times and started to conserve their capital instead of investing counter-cyclically. And institutional, sophisticated and retail investors reacted with fear and hid their cash. It seems very unfair that greed and stupidity at the top of the financial world should cause immense suffering at the bottom of the corporate world, but that's life and innovators everywhere have seen many years of hard work put at risk as they struggle to survive so they can perhaps commercialize another day. There have been some positive developments. The Rudd government has provided new financial programs to support innovative companies, such as Climate Ready and Renewables Australia, interest rates have come down, and the business angel sector in Australia is slowly but surely organizing itself into a significant force both locally and nationally. But for capital hungry innovators nothing beats a pool of patient, early-stage-savvy, and supportive investors who can put their hands in their pockets in tough times. In the technology game being patient can mean five or 10 years, early-stage-savvy means they understand the commercialization process and the high risk, and supportive means they see the vision and will give it a go. For most companies, especially the unlisted ones, the anecdotal evidence is still grim. Often the only difference between an unlisted company and a listed microcap is the public listing, but it's a difference that for a lucky elite can make possible a route to capital. By slowing down innovative companies, the global financial crisis has slowed down the future. Those companies that raise capital can speed it up again. Through these companies we can see not just the future, but many possible futures. Let's look at one. Along with raising $13.4 million, Ceramic Fuel Cells has launched its BlueGen mini power station that can make a home independent of the power grid by sitting like a dishwasher or small fridge and using gas to generate electricity and hot water. The units should be on sale in Melbourne next year. But Ceramic Fuel Cells has some high-level competition looming. Canberra based Australian National University and its international partners say they are only 18 to 24 months way from selling a solar powered unit that can sit on a house roof and also produce both electricity and hot water. Slowing down even one such future is a huge price to pay for anything. The cost is even higher when it's an Australian inspired future. Let's hope these capital raisings at the microcap end of the market qualify as a green shoot that everyone is now looking for and as a green green shoot that environmental investors are looking for. This article also appeared in The Business Australian
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