From Gizmos to Global Saviors

In the past several years, an intriguing trend has pervaded the venture mindset. The VC mantra has gone from changing the world to saving it.

A decade ago, most venture firms aligned their investments with a corporate CIO’s holiday shopping list. Today, glance at websites for some of the most prominent VC franchises, and you’d be forgiven for thinking you had landed on the Ford Foundation’s mission statement.

When did venture capitalists stop tinkering with a better mouse trap to hoist the globe on their shoulders? The most intuitive answer is in the aftermath of the greatest tech bubble in history, influential investors flush beyond their wildest dreams were left searching for greater meaning and satisfaction. As national markets became global, perceived boundaries vanished. New business opportunities in the developing world became more accessible, but so did the realities of environmental crises, epidemics and deprivation of basic human needs. These challenges are no longer in someone’s else’s backyard–they are everyone’s shared responsibility.

The demand is clear. But overlooked is the role that remarkable progress in the physical and life sciences plays in providing cures to the earth’s ills. Decades of U.S. basic research funding in chemistry, materials science and biology are behind critical breakthroughs in renewable energy, clean water and vaccines.

At Lux Capital Management, our portfolio is stocked with potential solutions to glaring world problems, ranging from vaccines to prevent global epidemics to new sources of clean energy to water purification technologies. Interestingly, this did not result from an explicit goal to save the world–but rather by finding the largest applications of novel technologies in life and physical sciences.

If history is any guide, we can expect the landscape in these sectors to be littered with disappointment, gaudy failures, and much hand wringing. I expect the beginning of a cleantech shake-out in 2008. But at the conclusion of the Darwinian process, we’ll be left with a handful of great companies that will change our world. That’s important to limited partners, but to billions of people who likely do not have the resources nor ability to read this post.