Comments on: Has Cleantech Moved Beyond VC?

By: Katie Fehrenbacher

Katie Fehrenbacher — Mon, 23 May 2011 19:14:17 +0000

@Samre Zureikat, Good point. Thanks!

By: Christian Garcia

Christian Garcia — Mon, 23 May 2011 18:41:47 +0000

Great article. This is something all VCs are struggling with, including us. Clearly the cleantech venture model of the last 3 years has not worked. Investing in capital intensive cost road maps and disruptive science projects proved to take too long and cost too much money for any risk/return to make sense and the IRRs just aren’t there.

I don’t think this means that VC no longer has a role – just that it needs to adapt its model. There’s really two ways to get at a risk/return that makes sense. Move up the stage curve, as a lot of VCs are doing and investing in rounds that will yield 2x-3x in short time frames, or invest in capital light models early where there is little technology risk but more execution/adoption risk. This is essentially the Greenweb/Cleantech 2.0 model, which I think will be a big winner for some folks. Solar, EVs and lighting are growing at 30+% CAGRs and there will be innovative business models to help accelerate adoption.P

People have talked about the Greed vs. Fear cycles of investing. While the broader tech space is in a greed cycle, cleantech is somewhere in between – and historically, it’s easier to make money in fear cycles when investors are cautious.

By: Samer Zureikat

Samer Zureikat — Mon, 23 May 2011 15:26:32 +0000

The last phase of Cleantech investing may have been characterized by an “us against them” attitude where some VC-backed innovations sought to replace, instead of compliment, conventional power solutions. Several Cleantech innovations that survived the last VC-investing wave have been those that have found buyers or partners in the conventional power business (e.g. Ausra-AREVA).

Cleantech VC still has a role to play in demonstrating the commercial scale of promising energy innovations.