Greentech investor Steve Westly has been out there raising a new $175 million cleantech fund for his firm The Westly Group, and tells Reuters this week he has closed on the first $50 million. But beyond chronicling the pace of his fundraising, what’s particularly interesting is that he also tells Reuters (s tri) the fund will have “a special focus on green building technology.”
Developing smarter building systems and using IT to manage energy consumption and lighting, has been a particularly hot area as of late, with a variety of acquisitions occurring over the past several months, from big power gear companies buying demand response software companies, to smart grid firms acquiring home energy management players.
There are a couple of reasons why smart buildings are a solid market for venture capital investment, in contrast to VCs backing clean power infrastructure and electric cars. The market has the benefit of having a variety of massive companies across sectors looking for innovation, like power gear companies ABB (s ABB) and Schneider Electric, IT firms like Cisco (s CSCO), and building automation companies like Johnson Controls (s JCI) and Honeywell (s HON). That means all these large firms are potential acquirers of the innovative, young startups that end up leading their space and bringing in customers.
In addition, smart building startups can build businesses around developing software and tapping into existing building system’s architecture. Software companies tend to be a lot less capital-intensive and can be more nimble than clean power or EVs firms.
Westly has seemed to have a pretty good record on his greentech investments compared to the rest of his VC peers. Both electric car maker Tesla (s TSLA) and biofuel maker Amyris (s AMRS) have gone public, and Westly tells Reuters that his portfolio company Amonix — concentrating photovoltaic solar company — should be able to go public one day, depending on market conditions (pictured left).
In addition, Westly says there is a good chance that they’ll have at least one — maybe two — more acquisitions this year. Westly has backed building software company Scientific Conservation, which has racked up an impressive list of backers and partners.
Images courtesy of The Westly Group,. Amonix, and Ariaski.