Clean Tech VC in 2011: Fear of a Bubble Subsides
The future of cleantech is either ho-hum or looking slightly sunnier in 2011, depending on whether you're talking to a venture capitalist or a CEO of a venture-backed firm, according to a new survey from the National Venture Capital Association. I guess the guys looking for money are trying to stay positive.
Still, the VC survey does reveal how start-ups in the energy sector are likely to fare next year. And it's not all bad -- it's just not as positive as other sectors like consumer Internet, cloud computing or healthcare IT.
Fear of a cleantech bubble has subsided among venture capitalist investors, meaning they don't expect overinvestment in the sector. If anything, it appears to have swung in the opposite direction. Only 38 percent of VCs expect to see an increase in investment in the energy sector, while 22 percent say it will stay the same as this year. That means 40 percent believe investment dollars will fall in energy.
VC funding is already dropping this year
We've already seen a drop in VC funding this year. In the third quarter it fell 30 percent from the previous one, according to the Cleantech Group. Still, fears of high-profile VC firms moving away from cleantech hasn't materialized. Kleiner Perkins Caufield & Byers, which some speculated would back away from the green sector, has recently invested in OPower. Greentech Media reported earlier this month that the firm joined Google Ventures to invest in solar firm Clean Power Finance.
Interestingly, CEOs and VCs had strikingly different views on which industry -- between infotech, cleantech and biotech -- would fare better in 2011. The vast majority, of VCs, some 69 percent, picked infotech, followed by biotech with 19 percent of the vote and cleantech in the rear with only 12 percent. But the CEOs, 39 percent, put cleantech on top, followed closely by infotech with 32 percent and biotech with 29 percent.
Will it be the year of the cleantech IPO?
Both VCs (66 percent) and CEOs (44 percent) anticipate more venture-backed companies will go public in 2011 with the technology sector expected to fare the best in the exit market, whether it's through an acquisition or IPO.
The view on cleantech isn't quite so rosy. Thirty-one percent expect an increase in quality in IPOs, while 53 percent expect the quality if IPOs to remain the same. In terms of the volume of cleantech IPOs, it's a similar story. Thirty-four percent of VCs see volume increasing, 31 percent say it will stay the same and 25 percent believe it will decline.
Photo from Flickr user marcusrg, CC 2.0
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