The difference between cleantech and other sectors

Below is one of the best statements I've heard that captures the challenge for cleantech companies versus those in other sectors (by Bob Walker of Sierra Ventures). This came at TiE Energy event where several VCs weighed in on the challenges in cleantech:

"We are used to companies that are powered by Moore’s Law that sell into an entrepreneurial environment. Intel, Google, Samsung, and LG [all] have an entrepreneurial core. They’ve got to come up with the next cell phone or display technology. These are industries where if you miss a product cycle or two, you are dead. A lot of the industries that we consider cleantech don’t operate that way."

Being the founder of a company in the water space with a new membrane technology, these statements certainly resonate with me. Pick your clean technology, whether it's a new membrane or a new energy storage device, and an associated metric (flux, energy/density, etc...) and you'll see anything but Moore's Law-like performance improvement.

Moore's Law transistor count growth curve, courtesy Wikipedia. Transistor count roughly doubled every two year, while chip performance (a function of number of transistors and their relative speed) doubled every 18 months.

For example, in the reverse osmosis membrane industry, the improvement in seawater membrane element productivity (that is, number of gallons per day a spiral wound element can produce) has averaged roughly 3% per year for the last 3 decades, as compared to the 60% per year performance improvement given by Moore's Law.

Why is this the case? Well, it may partly reflect the relative lack of innovation in the water and energy sectors relative to computing, but there are also hard physical limits many of the technologies work up against that will not budge, no matter how hard we try. Going back to the water example, energy/pressure reduction is one of great challenges in membrane-based desalination (reverse-osmosis) right now. However, currently technology is only within 50% of the theoretical (thermodynamic) minimum, and practical constraints limit the potential energy reduction to less than 50%.

To practicing VCs in clean tech, I'm sure I'm preaching to the choir, but I'm not sure these points are well internalized by the industry as a whole and perhaps society at-large. Order(s) of magnitude  performance improvements are not to be expected (in many cases) and timelines for prototype development/evaluation operate on fundamentally longer time scales than, say, the beta-release of an IT/Social Media product.

I think it's important for all of us to be properly calibrated as to what to expect of innovation in the clean tech sector and evaluate emerging technologies and investments therein accordingly.