Cascadia Capital: Parallels to the Internet Boom, Bust…and…Rebirth

We all remember the internet boom in the late 1990s and early 2000s. New companies sprung up seemingly overnight. The word “new economy” was all anyone ever heard. These “new economy” companies didn’t have revenue muchless profits so new metrics like “eyeballs” and “page views” were devised to justify astonishing valuations. Companies in the “old economy” quickly moved to embrace the internet or risk becoming obsolete. Many companies added “.com” to their name to increase the value of their companies.  Many companies flocked to the public markets where they were greeted with astonishing, seemingly “unreal” valuations based on hype and momentum as opposed to sound fundamentals. Then the madness came to an end as the economy went into a recession and the vast majority of the new internet companies went out of business. The internet became an area to be avoided by investors as capital flowed back into “old economy” companies.

However, a funny thing happened – a few bright and determined entrepreneurs, executives and investors remained in the sector and devised better business models and better companies.  Google, Facebook, Amazon and, eBay emerged during
this period and are now household names. Today, the internet is prevalent in our daily lives albeit without the hype. Sound familiar? It should.

The clean energy sector is going through the same re-birth process. Clean energy was the rage in the 2005-2008 time periods. All we ever read about was the “green” economy. Money, entrepreneurs, and executives came into the sector in droves, but business models and the ecosystem were not fully flushed out and many of the companies that were funded in the 2005-2008 time period have not made it through the recession.  The press, investors, entrepreneurs, executives and service providers left the sector for greener pastures (no pun intended).

However, dedicated investors, entrepreneurs and executives remained in the sector, working to improve the business models and technology. They have been joined by large corporations such as Boeing, Wal-Mart, Schneider Electric, and others who see profit in the sector and are becoming actively involved.  We at Cascadia are on the ground every day in this market. We were there at the beginning, throughout the past and existing turmoil, and we remain more committed than ever to this space. We are seeing better companies, better technology, better business models, and better executives in this industry every day. We strongly believe that a lot of the companies we see and work with will be well known companies in the 2013-2014 timeframe. Green companies are rising from the ashes. We remain believers.

Source:  Cascadia Capital November 2011 Newsletter.  Read MORE.