A Light Bulb Goes on, and China Starts Thinking ?Alternative Energy?

Tuesday, January 23, 2007

Mr. Li said that within six months, he expected to have a database of some 300 Chinese start-ups seeking investment partners. One of them will be a company called Ruikang, based in Jiangsu Province, near Shanghai, that handles organic tea, honey and Chinese traditional medicines.

Another start-up that he said was seeking investors is Shenwu, based in Beijing, which makes equipment to capture heat from a heating unit and redirect it for other uses.

Mr. Li said the big challenge facing American venture capitalists is not so much finding viable technology as it is finding capable managers.

Chinese entrepreneurs can “have a different speed and rhythm – everything is different because of the cultural background.” He insisted, though, that the situation is changing, thanks to exposure to international businesspeople and intensifying market demand.

“Things are changing, not just because the government is hungry for this,” he said of the demand for alternative energy. “The whole country is hungry for this.”

ON the vanguard of venture capital, the buzzwords of late have been “alternative energy” and “China.” Are the two worlds about to collide?

Seed investors are financing, or considering financing, start-ups in China that are developing equipment for wind and solar power, clean water and food alternatives and technology to promote energy efficiency.

While this may seem to be an arbitrary combination of two of the hottest trends in venture capital – sort of like the first person who mixed peanut butter and chocolate – there is a growing number of investors who believe that the potential reward in China is worth the tremendous risk.

China has voracious energy needs and “the most serious environmental problem in the world,” said Jerry Li, a consultant in Beijing who matches venture capitalists with entrepreneurs. “There is a huge demand for investment” in alternative solutions, he said.

Mr. Li is the first director of Cleantech China, a joint venture beginning this month between Tsinghua University in Beijing and the Cleantech Venture Network, a blossoming North American trade and research group for venture capitalists investing in alternative energy technology.

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Source: New York Times (link opens in a new window)