Why Clean Tech Is Taking Biotech's Shine

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Recently these gains have been applied to plants and other substances, such as shale, that form the backbone of alternative energy research. Traditional pharma research techniques have certainly improved, and some drug discoveries translate into alternative energy promise.

Beeley found much of his background applicable to his new company, EnrQi, pronounced "energy." He had long been fascinated with how plants convert light energy into chemical energy by photosynthesis, but his career remained focused on drug discovery. When colleagues found a protein receptor that changes when exposed to light, he immediately suspected a link to the search for alternative fuels. More research followed on the cascade of events leading to the conversion of carbon dioxide into stable, energy-containing molecules.

Long-Term Approach

People with biopharma bona fides fit well in clean tech because they're willing to take a long-term approach to research and development, experts say. "The development of technology-intensive energy companies is often very similar to the development of biotechnology companies because both have a long gestation period, large capital requirements, and a high degree of technical risk," says Hemant Taneja, managing director at General Catalyst Partners and co-chairman of the New England Clean Energy Council. "Management teams from the biotech ecosystem are very well suited to scale early-stage clean tech companies."

For all the interest in clean tech, biopharma remains alive and well, says Flagship Ventures general partner Jim Matheson. "Innovation and investment in drug discovery and development are still happening at a healthy rate," Matheson says. Still, some biopharma companies are clearly having a harder time lining up funding. "Investors are using more caution," says Michael Pavia, entrepreneur in residence at Oxford Bioscience Partners. Venture capitalists are focusing on reduced risk and a clear path to making money. While it might not always be clear that a new drug therapy will be a big seller, newly produced gas or electricity has a ready-made market. The domestic natural gas market alone is estimated to be worth $150 billion.

Some biotech vets are casting about in clean tech because that's where the jobs are. As large pharmaceutical companies lay off workers, existing small biotech companies are not able to absorb the influx of available employees, and companies are not being created quickly enough to use all available talent. The perceived greater risk of working for a drug-discovery startup is losing its luster with some. "We are seeing top-notch bioscientists—in chemistry, bioinformatics, identification, and other areas—being faced with reestablishing themselves in a completely unique forum, and we have watched as they have chosen to move toward alternative energy and biofuel," says Mark O'Connor, CEO of Monadnock Research, which follows consulting trends.

Putting Together the Perfect Team

As increasing numbers of scientists and other professionals make the switch to clean tech, it's more than just a skill set that gets them the job, O'Connor adds. "You also have to have a clear understanding of the company's vision and the individual's passion and put the two together."

It was a quest for the perfect team that brought Robert Pfeiffer and Mark Finkelstein together at Luca Technologies, a startup funded by Kleiner Perkins, Oxford Bioscience, and chemical giant BASF (BASF.DE). Luca uses the tools of biotechnology and genomics to cultivate microorganisms that produce natural gas in farm-like "geobioreactors" by consuming hydrocarbons. Pfeiffer's background is in oil and gas, but he knew he needed bioscience muscle. "Oil and gas guys are hunters and gatherers," he says. "We know where to find the gas, not how to make it." Finkelstein, a self-proclaimed "bug guy" with credentials from research-based drugmaker Schering-Plough (SGP) and the National Renewable Energy Laboratory, was key to unlocking the "cell consortiums" that produce methane.

The past 20 years saw astonishing advances in biotech. Those advances are now fueling growth in clean tech.

See BusinessWeek.com's slide show for more on the growth of clean tech.

Connie Johnson Hambley is a consultant for emerging companies in the biopharmaceutical and clean tech industries for Steele Executive Search, www.steelesearch.com. She can be reached at connie@steelesearch.com