Demand for Clean Energy IPOs is High — But What About Startups?


Wind energy company Iberdrola Renovables is slated to raise between $5.8 billion and $7.3 billion through its IPO on the Madrid Stock Exchange next month in what The Wall Street Journal calls “the world’s largest renewable-energy flotation.” Numbers like that are enough to make any energy investor pause, and the article concludes that demand for renewable energy IPOs is flying high, though “the sector is still dominated by mergers-and-acquisitions activity.”

What does that mean for the bulk of cleantech startups? At this point, not much. The upcoming IPOs that the WSJ references are large European wind-energy firms, and the buyouts referred to are also due to wind industry consolidation. As those who follow the cleantech industry know, exits in the young industry are still relatively hard to find.

And for venture-backed startups, mergers and acquisitions are not offering VCs the returns they want. Currently the commonly held sentiment is that venture firms are investing in cleantech startups that can exit through an IPO, not through an acquisition. As Tim Woodward, managing director of Nth Power, said on a recent panel we attended:

“We’ve played in this industry for eight years and we’ve waited for the M&A market to materialize and it never has, to date, in any significant way.”

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