I did a brief presentation to a small group of med device execs the other day. After getting through the remarks that I expected and answering the questions that I expected, mostly on the state of the venture economy, a question which I should have been prepared for, but wasn’t, came up: “What do you think will be hot this year?” Meaning, what spaces will get the investment dollars. 

The first half of my answer was easy: Capital efficient projects will get funded.

The next observation, however obvious, had not really occurred to me: Projects that are not capital efficient will not be funded. Three spaces that are not capital efficient are (1) biotech, (2) renewable energy and (3) clean tech (maybe that is part of renewables).

No one can be surprised that in an era of fewer and smaller funds, it is hard to get large capital intensive projects financed. 

The unfortunate thing is that Boston is biotech central and as a tech community we have placed a huge emphasis on green technologies. (Rightly so, in my opinion since ultimately the world is going to be constrained to go green or die.) But it (a robust funding environment for these technologies) ain’t going to happen any time soon.

Why? Because it makes more sense for VCs with limited funds and ten year fund lives to fund mobile apps and twitter derivatives than to build alternative energy sources.

I am not sure, but I would bet that if we were all somehow making a thoughtful decision around what makes sense for society to pursue, I can’t believe we would set up system that rewarded the 299,999th iPhone app before it rewarded the next renewable source of electricity.

Maybe I’m wrong: All in favor of more iPhone apps please send me a comment.