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Cleantech VCs New Year's Resolution: Be Conservative

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Millennium Finance Corp. of Dubai plans to launch a $200 million fund for renewable energy investments in partnership with Chicago-based Advanced Equities. The fund, set to be managed from a new office in India, will focus on “late-stage firms with low technology risk and established revenue streams,” Cleantech Group reports. In other words, it will serve as Exhibit A for the National Venture Capital Association’s forecast that VCs will steer clear of seed and early-stage companies in 2009. Translation, courtesy of Om Malik: In a stormy year, venture capitalists will be hiding under their desks.

Much ado has been made (here, here and here, for example) of the prediction that clean energy will fare better than most sectors on the financing front (it was the only sector in which survey respondents said they thought investments would increase in 2009).

To be sure, $200 million is a drop in the bucket for a sector that saw $4.6 billion of investment in the first three quarters of 2008, an increase of 82 percent over the same period last year, according to a report released today by Ernst & Young. But if Millennium’s safe-bet strategy is any indication of investors’ approach to clean energy in 2009, then early-stage startups with potential to lead innovation in the coming years may end up spinning their wheels instead. Still, the fund is a likely boon for India, which the National Venture Capital Association expects to be hit hard by loss of capital in 2009.

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