via FastCompany.com

Welcome to our annual guide to the businesses that matter most, the ones whose innovations are having an impact across their industries and our culture. Click a company name to view the entry, or determine your own ranking of the top four companies using a series of quizzes, games, and brainteasers.

1 Apple
For walking the talk

2 Facebook
For 800 million reasons to share

3 Google
For expanding its hit lineup

4 Amazon
For playing the long game

5 Square
For making magic out of the mercantile

6 Twitter
For amplifying the global dialogue

7 Occupy Movement
For embodying all the traits that make a Fast Company

8 Tencent
For fueling China’s Internet boom–and boldly moving West

9 Life Technologies
For speeding up genetic sequencing

10 SolarCity
For brightening up the sun-power business

11 HBO
For being the only TV network to delight with digital

12 Southern New Hampshire University
For relentlessly reinventing higher ed, online and off

13 Tesla Motors
For boosting the art and technology of electric vehicles

14 Patagonia
For selling more by encouraging customers to buy less

15 NFL
For stoking insatiable, year-round demand for professional football

16 National Marrow Donor Program
For matching technology with critical transplant needs

17 Greenbox
For inventing the next-generation Chinese fashion brand

18 Jawbone
For rocking the mobile lifestyle

19 Airbnb
For turning spare rooms into the world’s hottest hotel chain

20 72andSunny
For winning at the intersection of Hollywood and Madison Avenue

21 Siemens AG
For its R&D ambitions in energy, transportation, and health care

22 Dropbox
For transforming file storage into a very big business

23 Kiva Systems
For turning squat robots into e-commerce giants

24 Starbucks
For infusing a steady stream of new ideas to revive its business

25 Genentech
For making targeted, genetics-based cancer therapies

26 LegalZoom
For bringing tech and accessibility to the hidebound legal industry

27 Tapjoy
For driving advertiser engagement in a million-app world

28 Polyvore
For turning everyone into a fashion editor

29 Red Bull Media House
For showing what it really means to transform yourself into a media brand

30 LinkedIn
For making itself useful even when you’re not job searching

31 Liquid Robotics
For going deep in ocean monitoring

32 Gogo
For delivering first-class entertainment to the coach-bound masses

33 Bug Agentes Biológicos
For breeding a natural alternative to harmful agricultural pesticides

34 Chipotle
For exploding all the rules of fast food

35 James Corner Field Operations
For creating intimate green spaces out of industrial urban blight

36 Narayana Hrudayalaya Hospitals
For bringing medical care to the masses

37 Recyclebank
For making eco-friendly behavior a big game

38 UPS
For solving its customers’ number-one pet peeve

39 Networked Insights
For using real-time social data to make better products and advertising

40 Chobani
For becoming a dairy superstar

41 Kickstarter
For connecting creatives with fans to raise funds

42 SoundCloud
For giving the Internet a voice

43 PayPal
For recharging the sale

44 Berg
For wildly imagining the marriage of the digital and physical worlds

45 Boo-box
For pioneering social-media advertising in Latin America

46 Amyris
For driving biofuels into the mainstream

47 Knewton
For teaching education a thing or two

48 RedBus
For taking the wheel of the $2.5 billion Indian bus-travel industry

49 OpenSky
For creating a social, celebrity-powered shopping experience

50 Y Combinator
For building the next great Silicon Valley mafia

By Mark Fidelman, Seek Omega
via BusinessInsider.com

H.R. 2930 or the “Entrepreneur Access to Capital Act,” would provide companies the ability to raise up to $1 million (US) to fund projects and companies. The bill will ease fund raising restrictions and regulations on both companies and investors.

So if you are a start up in need of an early round of financing, you no longer need to ask friends and family, you can ask friend of friends or their extended network for seed capital. And that’s where companies like Kickstarter will have an advantage over Angel Investors.

Let’s face it, the Professional Angel community is insular. They invest in each others deals, they invest in similar types of deals, and they invest in who they know. Why? Because it’s safe and they have a legitimate need to protect their client’s capital. But that has led to a lack of investment diversity and has created an investment “group think” that is limiting the potential of the community.

Conversely, sites like Kickstarter and IndieGoGo enable people with a diversity of knowledge, skills and experience to fund projects and receive rewards for helping entrepreneurs. It’s called crowdfunding and it allows almost anyone to give money to an entrepreneur to complete a project.

In some aspects it’s like American Idol. Because it enables anyone to vote (by making a prescribed monetary pledge) and become a fan of a project (by following it). At the end of 30 days if the pledges don’t meet the minimum requirement as set by the entrepreneur, then the money is refunded to the investors. If the project funding goals are met, then the project moves forward, but with an important added fan base.

Today on crowdsourcing sites, project funding ranges between $100 – $8000 and pledges a fraction of that amount. But if H.R. 2930 passes, you can bet crowdfunding sites like Kickstarter will quickly move into the business of helping entrepreneurs raise Angel levels of capital ($100,000 to $1 million) .

So why will the Professional Angel Investment community die? Because, if entrepreneurs are given a choice between raising funds through an opaque, arduous and slow Professional Angel route versus a much more efficient, diverse and knowledgeable path, the latter will win ever time.

Case Study: KickStarter
Rather than speculate, I decided to invest in a Kickstarter project myself to understand how it all works. I chose an iPhone/iPad game called Stop Those Fish by Eye Interactive for three reasons.
First, I know the founder of Eye Interactive and he sent me an invite email to participate. Second, I could tell that Eye Interactive’s new game was creating buzz from my personal network which provided me with social proof (due diligence). Third, his first game Zombi Samurai reached #3 on the charts making it one of the most successful games in the last few months.

I asked Jason Seldon, Eye Interactive’s founder why he decided to raise funds from Kickstarter versus taking a more traditional route through Angel’s or friends and family. Seldon responded, “I believe Kickstarter’s value goes way beyond their stated value proposition of being a new way to fund creative projects. In addition to helping individuals and small businesses fund these creative endeavors, I believe it is also a way to generate tremendous pre-release buzz for a new product and to build a fan base prior to launch.”

Seldon continues, “It gives early adopters a unique sense of ownership over a new product. In our case, project backers actually get their names in the game credits. So it really encourages a deep connection with consumers. In a sense, you are building a street team comprised of all of your project backers prior to product launch. These individuals can then serve as brand ambassadors to help make your newly launched product a success.”

What the Crowdfunding Critics Have to Say
If the bill passes, the first objection you’ll hear from critics in regards to crowdfunding sites is the opportunity for scam artists to commit fraud and place unsophisticated investors at risk of losing their capital.
My reply to objection # 1 is twofold. First as we’ve seen with Wall Street, even sophisticated systems that are heavily regulated are subject to fraud. In this case, several hundred billion. Second, because sites like Kickstarter do their own background checks, make the process transparent, and allow potential investors to see who has invested (social proof), the risk is mitigated by a number of check points. I’m not saying it’s fool-proof, in fact I am positive we’ll see fraud at some point, but the benefits of crowdfunding far outweigh the potential for fraud.

The second objection I hear is that new start-ups will lose the coaching and networking opportunities from a professional Angel investor. In the short run, I agree with this objection. But in the near future, crowdfunding sites will overtake those basic functions and eventually crowd source the networking, intelligence and strategy aspect the Angels provide today. More, crowdfunding sites like Kickstarter will enable virtual teams to sign on (think eLance meets Kickstarter) to help start-ups fill talent quality gaps.

Who else will H.R. 2930 benefit?
Besides start-ups, crowdfunding sites, and mom and pop investors, companies like Angel List, and Bolstr will offer nearly anyone the opportunity to participate in an investment round.

For example, if the Social Customer Relationship Management (SCRM) start-up Nimble wanted to quickly raise a round of capital, Angel’s List could convert Nimble’s followers to investors by offering them a chance to participate in their next round of funding. If the new bill passes, I suspect Angel List will provide a swipe your credit card platform to participate.

As a quick aside, I’d like to touch on is the rich analytics and statistical information these crowdfunding sites can potentially track. Imagine giving start-ups the ability to see how many page visits, clicks, and conversions they’ve had to their page. More, who is referring potential investors to the page? Which segments of social networks seem to be supporting the idea the most? What is the sentiment of start-ups product?

That information could be used for a variety of purposes from improving the business idea to increased transparency.

The Professional Angel community will quickly lose its wings if H.R. 2930 passes. You can bet on it.
Sites, like Kickstarter, IndieGoGo, Angel List, and Bolstr will offer superior services through the crowd sourcing of funding, talent and the ability to organically build a fan base. These crowdfunding sites will eventually offer superior access to intelligence and strategy than professional Angels provide today. The crowdfunding process is much more transparent but potentially more dangerous than traditional Angel financing.

Read more: http://www.seekomega.com/2011/11/if-this-bill-passes-the-angel-investment-community-is-dead-and-companies-like-kickstarter-take-over/#ixzz1f8vBiwwN

via The Wall Street Journal

By Conor Dougherty

AUSTIN, Texas—As the nation grapples with stubbornly high unemployment, Texas’s political and high-tech capital shows one way to create good jobs for people who didn’t go to college: Attract highly skilled entrepreneurs, and watch the companies they start hire lower-skilled workers.

Praxis Strategy Group, an economic-development consultancy, estimates Austin added 50,000 “middle-skill” positions in the past decade. These are jobs that require a two-year associate’s degree or the equivalent work experience, and pay a median wage of $17.30 an hour, or $38,000 a year. That pace of growth is roughly four times faster than the nation’s as a whole, three times that of New York and Portland, Ore., and twice that of Phoenix.

Austin’s success in creating middle-class jobs runs against the grain of national trends. As America’s shift from manufacturing to the service sector has accelerated, economists have noted a hollowing out of such jobs.

In recent decades, a select number of brain hubs like Austin have attracted a higher percentage of well-educated workers and a lopsided share of new investment and young companies. In 1970, the top 10 most-educated metropolitan areas among the nation’s 100 largest had an average of 23% of workers holding a bachelor’s degree or higher, compared with 10% in the bottom 10, according to an analysis of Census data by Harvard University economist Edward Glaeser. The 13-percentage-point gap has widened every decade since, and had doubled by 2010.



Click on the interactive graphic to see the growth in middle-skill jobs from 2001 in Austin and other regions.

Beyond creating new middle-skill jobs, such brain hubs have generally higher incomes and for the most part have performed better through the recession. In Austin, the 7.1% average unemployment rate in 2010 was well below the nation’s during the same period.

Of course, Austin also has a fast-growing population, which helps create jobs in any economic environment. And it’s not as if other cities can create a more-educated populace overnight.

Still, Austin’s success in creating middle-level jobs shows how a well-educated work force can raise the fortunes of lesser-educated workers as well. Raleigh, N.C., has benefited from the same dynamic.

One consequence of the economy’s shift away from production toward brain work is that companies are constantly seeking new ways to break down high-value intellectual tasks into smaller, cheaper bits. Much the same way that assembly lines created millions of new jobs by reducing mass production to a sum of tasks, employers in Austin and elsewhere are constantly breaking down higher-skill jobs to “create new middle-skill, middle-income specialties,” according to a recent report by the McKinsey Global Institute.

Take Homeaway Inc., a vacation-rental service founded here in 2005 that went public this year. Its rapid growth allows entry-level employees to substantially raise their income, said Brent Bellm, the company’s chief operating officer.

Mr. Bellm points to customer-service representatives, who earn from $25,000 to the low-$30,000s range and field phone calls and e-mails from people using the company’s website. About one-third of them are promoted annually to areas such as a security team that monitors the site for fraudulent listings and removes shoddy properties. “In a few years, you can go from the high 20s to the 50s,” he said.

Simply put, rapid growth boosts the value even of workers who have a limited education but possess knowledge of a company’s systems.

Enrico Moretti, an economist at the University of California, Berkeley, notes that highly educated cities see faster wage growth for less-educated citizens as well as the high fliers. One reason is that that many lower-level employees use the most productive technologies and act as complements to more-expensive and highly-educated workers, making it much easier for companies to raise their wages faster than overall inflation.

Another force, Mr. Moretti notes, is called “human capital spillovers,” a fancy way of saying that many “middle skill” workers begin to acquire skills that are much more valuable than their overall education level might suggest.

That’s how Douglas Kanneman went from a bored retail clerk feeling grim about his prospects to a computer-equipment technician with a four-bedroom house and the chance to let his wife work part-time while looking after their two children.

Mr. Kanneman, 37 years old, began his working life like a lot of people who didn’t go to college—at a retail store with low pay. Looking to better his prospects at 25, he went to community college for computer training and eventually landed a customer-service job at SolarWinds in Tulsa, Okla., which makes software that controls companies’ information infrastructure like computers and phone systems.

Later, when SolarWinds moved to the tech hub of Austin, Mr. Kanneman went with it. As the company grew, he worked his way into the better-paying information-technology department. A year ago, he did something that he said validated the worth of his new skills: He quit for a higher-paying job elsewhere in Austin, and with overtime can now earn more than $90,000 a year.

“It proved that I was worth as much as I thought I was,” Mr. Kanneman said.

Write to Conor Dougherty at conor.dougherty@wsj.com

via Harvard Business Review

by Thomas Duesterberg

In what now seems a distant past, company research facilities like Xerox PARC and Bell Labs fueled innovation and growth for dominant American manufacturing firms. As the pace of technological change has quickened and the costs of R&D have grown, that model has ceased to work. Meanwhile, global competition has intensified the imperative to innovate; even long-standing manufacturing companies, such as Parker Hannifin, Timken, Kennametal, and United Technologies, strive to have 20% or more of their products be new or substantially revamped each year. Although many companies still maintain proprietary research operations (Google X lab, for example), they’re increasingly turning outward and depending on distributed or open research, in which firms or clusters of firms tap into larger networks of academic and applied work to drive new product and process development.

Of course, no single model of distributed R&D works for all companies. Large firms like Proctor & Gamble can push R&D and product innovation out through their supplier networks. P&G maintains a goal of 50% of its total innovation from outside the company, and half of that from outside suppliers. As Henry Chesbrough has argued, such a model requires rethinking internal organization as well as effectively working with the broader research community. Japanese automakers have long relied on their suppliers as innovation partners. U.S. automakers too have pushed product and process improvement out through their supply chain via the relentless drive to achieve 3% cost reduction year after year and still build competitive new models. Large firms can also buy smaller ones to acquire new technology.

Smaller companies in the manufacturing sector, competing in a global environment for increasingly sophisticated products, often don’t possess the financial strength or the in-house technical expertise to take advantage of the available science and engineering resources that can help them innovate and grow. New types of local and regional consortia or clusters are popping up in response to this problem, sometimes facilitated by public-private partnerships. An interesting example, just getting under way, is the Midwest Project for SME-OEM Use of Modeling and Simulation–a consortium of large OEMs like General Electric, Proctor & Gamble, and Deere; the State of Ohio; and several projects funded by the National Science Foundation (NSF), including the Center for Manufacturing Services, the Ohio Super-Computer Center, and the Network for Computational Nanotechnology (NCN). NCN serves as a virtual laboratory through online simulation and education. It develops models and simulation tools to predict behavior at the device, circuit and system levels for nanoelectronics, nanomechanics, and nanobio systems. It serves over 180,000 users and mounts over 10,000 simulations a year, and also provides access to supercomputers to its users as needed.

The idea behind the Manufacturing HUB, a NSF-funded initiative at Purdue and a key part of the Midwest Project, is similar to the NCN but more explicitly designed to aid small and medium manufacturers (SMEs) in getting access to models, computing power, and technical expertise to aid their product and process innovation. The models and computational resources will give SMEs access to the resources needed to solve advanced problems in areas like fluid flow, structural behavior, and material strength which are crucial to building advanced products and processes.

The common thread of these developments is building and accessing larger networks — beyond the single firm or even clusters of small firms — to create the new products and processes needed to compete in a global manufacturing market. Many questions about these models remain to be solved with actual experience — systems integration, disconnect between R&D and production, intellectual property rights issues, tragedy of the commons, leaking competitive advantage — but the trends are well embedded at this point.

What are you seeing in your business or research that can point to the strengths and weaknesses of these models?

THOMAS DUESTERBERG

Thomas Duesterberg is the executive director of the Program on Manufacturing and Society in the 21st Century at The Aspen Institute.

via Harvard Business Review

by Chandrakant Patel

I joined Memorex Corporation in the early 1980s as a mechanical design engineer. You may recall the commercial “Is it live, or is it Memorex?” featuring Ella Fitzgerald. Ella sings live, and the frequency of her delivery makes a wine glass shatter. The same delivery, recorded and played back on a Memorex audio tape, makes a structurally similar wine glass shatter, proving the high quality of reproduction of Memorex’s tape. The commercial was clever, and viewers understood it. In an era of physical innovation, people understood instinctively how things worked, even if they weren’t familiar with the underlying theories of physics. That understanding of why certain things happen in a given system, under given conditions, is equally necessary today, but over the last three decades, we have abstracted it away.

As advances in technology have allowed us to work in more virtual ways, we have literally and figuratively lost touch with the products we’re building. The result is that now have a crucial gap in our systems, because we no longer fully understand how each component of the system works. Not understanding the physical complexity of a given infrastructure may result in grave consequences for the IT industry. For example, if engineers don’t possess the know-how needed to limit the material and energy cost of setting up and operating cloud services, IT can’t scale as it needs to.

We’ve lost the capability of understanding such physical complexities for three reasons:

1. The rise of software. Layers of software distance consumers, designers, and engineers from the underlying physical infrastructure.

2. The trend toward off-site data storage. In the 1980s, I designed large hard drives the size of washing machines that stored about 1000 MB of data on 14-inch disks. Data storage was very tangible. Today, consumers and enterprises store their data in the more intangible “cloud.”

3. Offshoring manufacturing and design. In the early 1980s, those hard drives I worked on were manufactured right next door to our R&D facility. With their read-write heads rotating microns above the disk, their large mass, and their numerous components, they were highly susceptible to external shock and vibration. That meant applying meticulous analysis and experimentation associated with the dynamics of structures. Because the engineers who had designed the drives were right next to the factory, they understood how their designs fared in manufacturing. Since they knew the customer environment in which the hard drives operated, they were better equipped to understand system-level consequences. In the late 80s, manufacturing left the U.S. to lower-cost geographies, but the design work continued in the U.S. As hard drives became smaller and improved technology reduced the number of components, design and value-added engineering also left the U.S. At the same time, companies in the U.S. also realized that there was an opportunity in making large scale data storage systems consisting of hundreds of small hard drives. They achieved differentiation by adding software layers for management and application development, rather than by designing better hardware. The result is that today, most consumers and software designers don’t think about the thousands of physical rotating disks on which their software and storage needs depend. But the systemic challenges associated with physical design have not gone away.

In our “software and sheet metal” age, the knowledge of hardware design and operation must now exist at a system level. For example, the high heat density of racks that house multiple drives and computer systems necessitate high-speed fans for cooling. These cooling fans, rotating at high speeds, cause vibrations that may align in frequency with one of the read/write arm frequencies in the hard drives. As in the Memorex commercial of yesteryear, that stimulus causes read/write failures and reduction in data throughput. The vibration problem that we wrote off in the age of standalone drives has manifested itself in new large-scale systems installed in data centers.

Problems like this are becoming more and more difficult for today’s engineers to solve, because you can’t fix problems in a system without understanding its components. With design and manufacturing of components gone, the “out of sight, out of mind” scenario has resulted in a loss of engineering knowhow to get to the root cause. Therefore, when it comes to complex hardware, instead of taking a systemic perspective steeped in fundamentals to address the root cause, we make up for the hardware failures by adding redundancies. In the case of hard disk drives, the mantra is “drives are cheap,” so we over-provision with redundant drives and data replication. Indeed, our data is replicated in many drives in a given location to account for drive failures, and geographically dispersed to avoid regional catastrophes like a natural disaster. Such over-provisioning adds to the cost of service and, in a resource-constrained world, is not sustainable. While we have provided IT access to about 20% of the world, we will not be able to increase that scale — akin to Moore’s law of scaling in semiconductors — unless we reduce our total cost of ownership by at least 20%. Traditional scaling of IT to the masses is going to hit a wall.

Furthermore, in the future, we will need to build software-based applications to enable the efficient and reliable operation of physical systems such as pumps, motors, waste water systems, water distribution systems, and the power grid. In this expanded role for IT, how can we manage such physical systems without knowing how to design and manufacture them? While it is not practical to turn on a dime with respect to returning manufacturing and design to the U.S., we must take action now by building a cadre of people with “hands-on” knowledge garnered in high schools, vocational schools and universities. In addition, to facilitate IT-based management of physical systems, we will need to be analyzing data streams from power components, pumps, compressors, etc. The analyses of these data streams will require interdisciplinary scholarship in computer science and mechanical engineering.

To be able to build these applications, and run IT cost-effectively, the high-tech industry needs engineers with equal facility in computer science and mechanical engineering — people who thoroughly understand the physical complexity and limitations of these systems and who can use that knowledge to build smarter, more well-integrated software. Very few people have those skills today, so we must train them. As salaries begin to level off globally, this will allow a return of manufacturing and component design to the U.S.

CHANDRAKANT PATEL

Chandrakant D. Patel is an HP Senior Fellow and Director of the Sustainable Ecosystems Research Group at Hewlett Packard Laboratories. Chandrakant has been a pioneer in microprocessor and system thermo-mechanical architectures, management of available energy as a key resource in “smart” data centers, and most recently, application of the IT ecosystem to enable a net positive impact on the environment. He teaches at Chabot College, U.C. Berkeley Extension, Santa Clara University, and San Jose State University.

SHELBY CLARK, the founder of a start-up called RelayRides, was honored last week as a rising star in clean technology. But as he took the stage alongside companies creating new kinds of energy, he felt out of place.

RelayRides is a car-sharing start-up. Since when did encouraging people to drive carbon-spewing cars qualify as clean tech?

In Silicon Valley, where venture capital dollars nurture fledgling technology companies, clean tech is getting a makeover. Many investors are shying away from the high risks and costs of creating new forms of energy. Instead, they are doing what they do best — using software to cope with problems, in this case caused by climate change.

RelayRides, which lets car owners rent their vehicles to others, takes cars off the road because people can avoid owning them and the service’s users drive less than other people, Mr. Clark said.

“You can have a major impact on an individual’s carbon footprint by re-creating business models or behaviors without inventing a new energy,” he said.

This strategy has been percolating among some in Silicon Valley for a couple of years. But for many investors, doubts about alternative energy were confirmed last month when Solyndra, which made solar panel arrays and had raised more than $1 billion in venture capital and $528 million in government loans, filed for bankruptcy protection.

“A lot of people see it as a symbol of what they do not like in green investments or government involvement in tech,” said Nathan E. Hultman, director of the environmental policy program at the University of Maryland and a fellow at the Brookings Institution. “If the V.C.’s pull back, then a lot of these companies are going to have to fold, or at least put their plans on hold.

“This is a very familiar stage in the energy industry called the valley of death,” he said.

Green tech investing had been declining even before Solyndra. Venture capitalists invested $891 million in 80 such start-ups in the third quarter, an 11 percent decline from $1 billion in 88 companies in the second quarter, according to the National Venture Capital Association.

Investors, accustomed to financing low-cost Web start-ups, had grown wary of spending the money needed to pay for basic research and build factories to produce energy. Adding to their caution is uncertainty over whether Congress will exact a carbon tax, an increase in natural gas production in the United States and the difficulty of competing with the established energy industry.

But the Solyndra bankruptcy further spooked venture capitalists and particularly the pension funds, endowments and foundations that invest in venture capital, said Mark Heesen, president of the National Venture Capital Association.

Investors, he said, would continue to shift from investing in alternative energy to investing in companies that cope with climate change by, for example, using software to make buildings and cars more efficient.

Venture capitalists are on track to invest $275 million this year in start-ups that make software and other technologies that conserve energy or manage its use, up from $234 million last year and $104 million in 2009.

“Capital-intensive companies that take long cycles to create things, whether they’re solar voltaic cells or giant wind turbines, are not very scalable, so those are really tough businesses to imagine as venture-funded opportunities,” said Bill Maris, managing partner at Google Ventures.

His firm has invested in RelayRides and other start-ups that stretch the definition of clean tech investing. They include the Climate Corporation, for extreme weather insurance; Clean Power Finance, which runs an online marketplace for financing residential solar panels; and Transphorm, which makes tools that reduce power loss when electricity is converted in data centers or industrial motors.

“It’s tech companies that are applying their technology to this industry,” Mr. Maris said. “Those are the kinds of companies we tend to really understand and like.”

At first glance, companies like the Climate Corporation, which insures rural farmers, seem to have nothing to do with either technology or climate change. But David Friedberg, a Google veteran who is the company’s co-founder and chief executive, said its goal was “to help all the world’s business adapt to and understand climate change.”

For farmers, that means analyzing “crazy big data,” Mr. Friedberg said, from weather stations, government data feeds, soil moisture models and Doppler radar images. The Climate Corporation simulates the weather for the next two years and runs a Web site where farmers can enter their location and crop, buy insurance coverage and automatically receive payments for bad weather.

Soybean farmers in the Dakotas were recently paid for delayed planting because of an unusually rainy spring, and wheat farmers in Oklahoma and Texas were covered for a intense drought.

The Climate Corporation this month changed its name from WeatherBill, and Mr. Friedberg said he worried that the connection between his software and climate change was too vague for the new name to make sense.

“We were a little concerned about changing the name for fear of farmers thinking we’re a bunch of hippie Californians,” he said. “But the farmers said, ‘Yeah, it’s the climate that’s totally messing with us. The weather today is not the weather of my pappy or grandpappy.’ ”

FirstFuel Software is another company using computers to cope with climate change. It analyzes a building’s electric use based on data, without visiting the building, and produces an energy-saving plan. It raised $2.4 million from Battery Ventures and Nth Power in September.

Opower, which has raised $66 million from venture firms like Accel and Kleiner Perkins Caufield & Byers, gives electric and gas companies tools to communicate with customers, like text-messaging them midmonth if their electric bill is running particularly high.

Despite the interest in these types of companies, some venture capitalists are still betting on big alternative energy experiments.

Khosla Ventures announced this month that it had raised a $1.05 billion fund, one of the biggest this year. About 60 percent will go into clean tech and the rest into Internet and mobile start-ups.

“We’re not changing strategy,” said Vinod Khosla, the firm’s founder. “We’re sticking to our guns.”

The firm has invested in companies that make engines and biofuels and one that is trying to turn carbon emissions and seawater into cement. Mr. Khosla said he believed that start-ups that built efficiency software did not do enough to address climate change.

“They do the 5 to 10 percent improvements here and there,” Mr. Khosla said. “What we need is the 100 percent or 400 percent improvements.”

The problems brought on by climate change will not be solved without venture capital, he said. But what if Silicon Valley continues to recoil from tackling experiments like creating alternative energies?

“It’s the survival-of-the-species question,” said Eric Wesoff, a senior analyst on energy and venture capital at Greentech Media, a research firm. “If the V.C.’s are not willing to take that risk and the innovation slows, who’s going to fill that gap? Is it going to be China?”

Already, the bulk of the innovation is coming from India, China and Europe, Mr. Heesen said.

“We have been behind,” he said, “and we’re just going to get further and further behind in an area that is one of the few that can actually create jobs in the next 10 years.”

via NYTimes