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Summary:

The California Public Employees’ Retirement System, which is the country’s largest pension fund, has put close to a billion dollars into cleantech over the past five years and says it’s only returned a tenth of that capital. Yikes.

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The country’s largest pension fund, the California Public Employees’ Retirement System, has lost a considerable amount of money investing in clean technology. CalPERS had close to a 10 percent negative return (9.8 percent) on the around $900 million that it’s put in the cleantech sector, which includes $460 million that it’s put into clean tech venture funds, said CAlPERS CIO (chief investment officer) Joseph Dear at the Wall Street Journal’s Eco:nomics conference on Wednesday night.

Over the past five years, CalPERS has been one of the largest sponsors of cleantech venture-backed innovation. Dear said CalPERs received one tenth of the capital back from its cleantech fund, and has now dialed back on both its investments in venture capital as well as cleantech VC funds. CalPERs has also tried to be more careful with its partner selection, he said.

“Just because it’s a good idea doesn’t make it a good investment … This has been a noble way to lose money.”

Across the CalPERS portfolio, Dear said, he has to make a 7.5 percent a year return.

The indictment is the most definitive one I’ve heard to date confirming that for the most part, the experiment of venture capitalists investing in cleantech didn’t work. There are a few funds that have done fine, and are launching new cleantech funds like The Westly Group. Khosla Ventures, Braemar Energy Ventures, DBL Investors and Lux Capital are also still investing in cleantech. But the list continues to shrink.

VantagePoint Capital Partners CEO Alan Salzman said during the same panel that corporations are stepping in to pick up some of the cleantech investments. VantagePoint recently stopped raising a planned billion dollar cleantech fund due to lack of interest from limited partners.

But according to the Cleantech Group’s figures, corporate investing also has been dropping every quarter throughout 2012. Corporate investors put $31 million into cleantech startups in the fourth quarter of 2011, and that dropped to $26 million in Q1 2012, $24 million in Q2 2012, $20 million in Q3 2012, and $18 million in Q4 2012.

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  1. Alexander Haislip Thursday, March 21, 2013

    Katie, there has to be some good that’s come from the cleantech revolution beyond electric cars and slightly less expensive solar panels. At the highest level, what would you say we’ve gotten from the past six years of cleantech innovation and investment? It can’t be just a crater.

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