Two San Francisco Bay area investors – having trolled through the dizzying world of renewable fuels from wave power, to hydrogen fuel cells, to lithium batteries, to cow manure for making methane –recently launched their own company, LiveFuels Inc., to find an energy-efficient way to convert algae into fuel.

They are among hundreds, if not thousands, of start-ups in the alternative-energy business, some so tiny they are run out of home basements. But the bigger ones are beginning to take off. A handful is now building at least three demonstration plants to convert wood chips and grasses into ethanol in the United States and Canada.

Meanwhile, U.S. venture capital flowing into clean energy leapfrogged to more than $2.4 billion in 2006, more than double that invested in 2005, and more than triple from 2004, according to Clean Edge, a research and consulting firm. The numbers are small compared with the research budgets of the big oil companies, but the ascent of venture capital in renewable energy has reminded some Silicon Valley venture capitalists of the early flow of money into the Internet in the mid-1990s.