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Amid concerns that the planet is warming, the market for clean, green technology is beginning to show signs of overheating, too.
"I call it the global warming bubble," said Robert Metcalfe, who knows something about bubbles. An inventor of the Ethernet networking standard and the founder of 3Com, whose stock plummeted when the technology bubble burst in 2000, Metcalfe now serves as chief executive of a biofuel start-up, GreenFuel Technologies.
But while the flurry and investment that comes with a bubble creates a froth that inevitably results in some big losses, Metcalfe and others argue, it also creates an environment where disruptive ideas can emerge and change the world.
"What bubbles do is they're an accelerator in technological investments to be made; they cause the status quo to be questioned," Metcalfe said.
"The trick, of course," he said, is "to have a chair when the music stops."
With the Cleantech Report from Lux Research counting 930 energy start-ups worldwide last year, and corporate spending on clean-technology research and development up 10 percent between 2005 and 2006, to $22 billion, there can be little doubt that many idealistic companies promising to change the world will flop.
But Ted Sullivan, a senior analyst at Lux, said the influx of money and the interest in renewable energies was not creating one big unsustainable bubble but rather "boomlets." He cited biofuels and the solar industry as recent examples.
In the biofuel sector, some companies have withdrawn their initial public offerings or scaled back plans, he said. A Seattle biofuel company, Imperium Renewables, withdrew its public offering in January, and the biodiesel company Renewable Energy Group, of Iowa, withdrew its offering in March.
Still, Sullivan said, the energy problem - driven by environmental concerns and rising costs - is so huge that the entrepreneurial activity, scientific research and patents that are building in the sector represent real advances.
"This isn't a bunch of kids in Bermuda shorts coding a new Web portal," Sullivan said. "There's still a lot of progress there, and if someone gets it right the upside is massive."
John Balbach, managing partner of Cleantech Group, argues that the situation is far from a bubble, but instead has natural waves of investment that surge and ebb. "Biofuel as a category continues to move forward, but it has shifted to different technologies," he said.
Many of the North American and European investors who sank $5.2 billion into "clean tech" companies last year - up from $714 million in 2001, according to Cleantech Group - are alumni of the last high-tech boom and bust.
Venture firms that once focused on information technology are beginning to make green investments. Metcalfe, now a managing partner at Polaris Venture Partners, is one example of someone from information technology making his way into green businesses. He also sits on the boards of a solar company and a battery company.
John Doerr, the Silicon Valley venture capitalist who counts Google, Amazon and Sun Microsystems among his early investments, has said that "green-tech could be the biggest economic opportunity of the 21st century." Vinod Khosla, a co-founder of Sun Microsystems, has become well known as an ethanol advocate, founding a venture firm that makes investments in renewable technologies.
"I've found a ton of people I know in the high-tech field say, 'I want to change, I really want to get into clean tech, I want to do something I feel good about, how do I do it?"' said Mitchell Tyson, chief executive of Advanced Electron Beams, a company working on creating energy-efficient industrial processes.
Since both fields involve technical material, innovation, rapid growth and disruption of traditional industries, Tyson believes that successful high-technology entrepreneurs will make an easy transition to green technology.
Hemant Taneja, co-chairman of the New England Clean Energy Council and a managing director at General Catalyst Partners, is one example of a high-tech expatriate who sees extraordinary opportunity in clean technology.
"I think we're absolutely in a bubble," said Taneja, who founded and sold a mobile software company before he shifted to clean-tech. "But when the correction occurs, the glaciers are still melting," he said, while the price of oil will continue to go up.
