Many investors are seeing fund raising slow down, and the CalCEF Clean Energy Angel Fund is no exception. The fund, which in October said it had raised $9.3 million toward its goal of $20 million, is still working to raise the rest of the money. Representatives said it has raised “about half” of the cash so far.
The angel fund is a for-profit venture that the Clean Energy Fund, a nonprofit founded with $30 million from the Pacific Gas and Electric Company bankruptcy, launched last April. Susan Preston, the angel fund’s general manager, said the fund raising is taking longer than expected because of the recession. “We’re working very hard at it, but it’s a struggle right now, no question about it,” she said. “We’re talking to lots of people all over the place, and everyone is saying, ‘We’re sorry, we agree with what you’re doing, but we just don’t have money right now.'”
The dramatic economic downturn has been such a shock that investors have become “like deer in the headlights,” Preston says. “You know you should move, but just can’t see how — that’s the best analogy I can think of for how people are feeling right now. If we can get them to move away from the headlights,” there will be a much more prosperous time ahead, she said.
Preston argues that early-stage startups are a good investment in the downturn because of their countercyclical nature. In other words, because companies are a few years away from an IPO or an acquisition, they could be well-poised to take advantage of an economic recovery down the road. “When you have a very early-stage company, you can have greater flexibility about when you decide to pull the trigger on a liquidity event,” she says, adding that startups are a good deal right now. “We can take advantage of valuations … and continue to organically grow these companies until we’re ready and the market’s ready for them.”
She thinks a time of cleantech acquisitions — read “exits” — is coming. “As cleantech becomes an increasingly important part of the economy, many companies will be looking for ways to expand in the market, and one very easy way for them to do that is through acquisition,” she says. “I actually think it’s a great time to be having investment activities. But it’s tough getting people to see that right now.”
The fund is looking at energy-efficiency technologies, such as lighting and energy-management software and components, she said. It also is considering technologies that could take advantage of anticipated new policies, such as technologies that calculate companies’ carbon footprints, which could work with a carbon cap-and-trade program. The fund in October announced investments in efficient-lighting startup HID Labs, biofuels company Allopartis Biotechnologies and an undisclosed solar company.