For the third consecutive year, Apple tops the list of most innovative companies.
Modern Alchemists Struggle to Turn Ideas into Gold
The stampede to find alternative energy, conserve fossil fuels and develop sustainable power sources to satisfy the world's growing demand has spawned hundreds of startups looking to get in on the action. They're also looking for your money.
The lure of private placements is often tied to pie-in-the-sky promises of getting in on the ground floor of the next big thing. The risk-reward scenario can be as curious as the technology itself. It might sound attractive and marketable, but it could take a long time to develop and even longer to show any kind of returns.
Some of the companies that have been financed with millions in private investments over several years have yet to make or sell a single product. One, Chava Energy, is involved in research on magnetic energy and creating a car that runs without fuel and generates electric power at the same time. The California company has been touting something called zero point energy, which according to its own website is "considered extremely unlikely by most physicists" to become a source of usable energy.
Another company claiming to be on the cutting edge of new technology is Scuderi Group, one of dozens of fledgling companies trying to develop a new generation of more efficient internal combustion engines. Founded 10 years ago, the Massachusetts-based company has raised more than $80 million through private placement investors since, and though it had projected revenue of $115 million for 2011 in its prospectus, Scuderi Group has yet to license any of its engine technology and has zero sales so far, according to SEC filings.
And while the promise of science that can develop better fuel performance with fewer emissions could be a reality someday, investors should be aware that most of these ideas never make it to market.
Though the rewards could be great, eventually, investment in these types of research firms should be left for investors in no hurry to turn a profit.