An unusual contest for clean tech startups - the California Clean Tech Open - began its fourth annual challenge on Thursday, with more than $1 million in prizes and a challenge to create 100,000 new green jobs over the next five years.
The contest is rare because anybody with an idea, no matter how wacky or unproven, can enter and try for a chance at the next phase - training on how to start and run a business.
This year the Clean Tech Open is expanding beyond California to cultivate startups in the Rocky Mountain area and the Pacific Northwest. To date, 125 startups that have participated in the contest have raised more than $120 million in outside funding.
"I don't know of anything quite like it," said Jeff Grabow of Ernst & Young, which provides coaches and helps sponsor the contest.
Despite the excitement in the sun-filled rotunda of San Jose City Hall, several people said the recession had made funding much harder to come by this year, even for clean tech startups - one of the few remaining growth spots in Silicon Valley.
Venture capitalists are pulling back, partly because their funders are pulling back, said Scott Sandell of New Enterprise Associates in Menlo Park. He expects the venture capital industry to shrink this year by 50 percent.
"Assume the cash you have is all you're going to get," he said. "Your customers and partners are eager to help you - ask them."
Everybody is looking to the Obama administration to help fund clean tech projects, but research and development might still suffer, said Marc Gottschalk, a lawyer at Wilson Sonsini Goodrich & Rosati in Palo Alto who co-founded the nonprofit Clean Tech Open in 2006.
"My fear is that the government will be too timid and will back existing companies with less beneficial technology," he said. "They'll fear a public backlash if the money doesn't bring products to fruition."
Startups are hunkering down and trying to make their cash last as long as possible.
GreenVolts in San Francisco, a previous winner that concentrates solar energy using reflectors and photovoltaic cells, confirmed a report in Greentech Media on Thursday that its project to build a demonstration power plant for PG&E near Byron has been delayed until mid-2010.
GreenVolts last raised money in September before the stock market crashed. Now the company will use that money to focus on perfecting its technology before finishing the plant.
"Everybody is so reluctant to finance any type of project right now," said Gary Beasley, the chief financial officer. "It's like catching a falling knife."
Still, determined and hopeful aspiring entrepreneurs turned out.
Karl Kovac entered the contest for the first time with an idea that he won't reveal, except to say that it involves conserving water and recycling waste.
"It's an 'a-ha' type of product," he said. "It came to me in a dream."
His wife, a schoolteacher, is the family's wage-earner at the moment while he volunteers at several Silicon Valley clean tech organizations and works on his business plan.
He also talks to her classes dressed as a superhero, Michael Recycle. "She believes in my vision for a healthier planet," he said.
Business plans are due May 30.
This article appeared on page C - 1 of the San Francisco Chronicle