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Between 2006 and 2008, more than $1 billion venture-capital dollars were channeled into startups focused on solar, wind and biofuel technologies. In the last year, however, early-stage investments in clean energy production technologies have fallen substantially (see the table at the end of this piece for more detail). Many venture capitalists are limiting their investments to the "demand-side" — aimed at reducing energy use — rather than investing in startups trying to change the way we produce energy.

It's easy to see why VCs have soured on the sector: the traditional VC model is based on high-risk, capital-efficient business models with the potential for huge exit valuations. Even if most of their investments fail, a few spectacular successes can "make the fund" for a VC. A star example is Google, which raised a mere $40 million in private funding before its IPO at a $23 billion valuation.

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