Exceeding expectations is the name of the cleantech game for investor Steve Westly these days. Last night, he said at the Reuters Global Climate and Alternative Energy Summit that his firm, the Westly Group, set out to raise $100 million for a new cleantech fund that will be formally announced next week — but he expects to beat that goal, Reuters reports. Predicting that at least a dozen cleantech companies will go public in 2010, he added, “It wouldn’t surprise me if we exceeded that.” Bullish, much? That could be a good sign for cleantech startups seeking venture capital.
Like Khosla Ventures, which raised a significant chunk of its new $1 billion fund from the California’s CalPERS, the Westly Group counts pension funds among the investors in this new fund. While Khosla’s latest fund represents a departure from his usual model of personal investing, however (the fact that external investors committed so much capital is also a sign of bullishness for the sector), principals are committing more than 20 percent of the capital for the new Westly fund.
The Westly Group has invested more than $50 million so far in cleantech startups, including some $5 million in electric carmaker Tesla Motors. Now that it’s about to triple that stake in cleantech, the firm is still interested in electric vehicles, as well as smart grid technology, green building materials, recycling and solar power, and opportunities in China. The country holds plenty of opportunity for electric vehicle makers (startup Coda Automotive and Warren Buffet-backed BYD Auto are banking on it), and the market there plays an important role in the road to an affordable EV.
Earlier this year, however, Westly said at Earth2Tech’s Green:Net conference that he was unwilling to make investments in cleantech startups that will require a lot of capital and take a long time to reach an exit. Tesla and any future plays in electric vehicles and solar don’t seem to match that strategy, but the reasoning behind it makes sense: Westly expects the returns on cleantech deals to be lower than the thousandfold returns on web and IT-related deals.
Steve Westly photo courtesy of The Westly Group