From our friends at the Green Inc. blog:
Global venture-capital investments in clean technology rose 37 percent in a year, to a record $2.6 billion for the third quarter (July through September), according to the Cleantech Group, a research firm. Companies involved with smart-grid applications, algae and thin-film solar had a particularly good quarter.
And while some analysts are optimistic about clean energy’s ability to weather the current storm, the Cleantech Group — whose numbers cover North America, Europe, China and India — expects a fourth-quarter pullback as financial conditions deteriorate and even venture capital companies close their wallets.
The clean energy industry needs huge amounts of capital. Unlike many of their dot-com predecessors, solar or biofuels companies are hardware-intensive (think factories and large-scale equipment), rather than software-driven. And while clean energy funds have swelled in recent years, companies that need to raise more capital, or that had hoped for an initial public offering, may run into trouble.
“With the I.P.O. market basically being closed for a long time, you might get a bit of backup in the system,” said Bruce Jamerson, chief executive at Mascoma, a company that is working to commercialize cellulosic ethanol and has backing from Khosla Ventures, Marathon Oil and others. Read more …
5 Comments
Think about it. The Clean Energy Bubble. On the other hand, if you cant invest in equity , debt etc without losing your shirt, this is one area where you can make a profit saving the world. Google.org ’s silence in being the obvious leader in this should be queried.
— AjayI’ve been predicting this pull-back for 3-6 months. There’s way to much money out there chasing clean tech right now - it’s the green irrational exuberance. Look for signs that the clean-tech bubble will burst soon.
— Steffan AntonasEnergy infrastructure is a long-term play, 20+ years and ultimately low margin (unless protected by regulated monopoly). Right now VC money is going into research, trying to drive the cost of clean energy below that of conventional energy (coal powered electric plants and gasoline powered cars).
Once we get to that point, regular businesses like GE and the utilities will pour billions into it. Until then it’s speculation on getting a piece of a huge business. No reason to put all your money in right now when you can spread it out over ten years as new research gets published.
In a financial crisis investors pull back from making long-term investments and focus on keeping the cash hoard safe for buying at the bottom. Makes sense even for the craziest of speculators.
— MarcoCriticism of green energy “subsidies” is off the mark. All capital intensive new energy generation (e.g. nuclear) have been heavily financed by governments, in a way or in another. Today, a well conceived and above all stable combination of tax breaks and feed-in tariff would be the healtiest economic stimulus: a reward for innovative manufacturing and sound investment (as opposed to risky housing mortgages and consumers gadgets). An aggressive energy policy is the new New Deal
— GertsenThe problem is that our economic system is set up with a very short-term vision, debacles like every bubble in memory (which for the American public has quite a short one) are the result of obsession with quarterly results and personal greed and not looking out 100 or 200 quarters, rather that at just the current one (or two, if we’re lucky!), It’s just good prudence business-wise. By the way, 100 quarters, gasp (!) is only 25 years. The people who manage our system are paid based on short-term results and perish the thought that a company’s growth miss a predicted quarterly goal – down with their stock value!!
I have a friend who works for Big Oil who argues that going ‘green’ isn’t cost effective - look how much green power costs! What people delude themselves into is not thinking about this long-term. In 50 years or 100 years, we will look so silly and, frankly, greedy and stupid, focusing on 5 year business plans (not that our system even looks that far ahead), rather than what happens when being asleep at the ‘clean coal’ (!) and petroleum switch for decades will do…
How’s the quarterly return going to look when the sea level is 10 or even 20 feet higher? How about when summers in Atlanta are 115 degrees and no rain for 8 months? How about when a quarter of New York City is underwater? How about when the Midwest is so depleted by floods and bad weather that we can’t grow anything but weeds? Canada is going to look great and be quite balmy in 100 years, that is until we deplete every last inch of topsoil there like we are doing in the US Midwest.
There is a reason that we have a ‘public infrastructure’; business cannot manage it properly, ever, with short-term profit as a goal. If the Wall Street collapse is a not a giant elephant in the room as an object lesson, I don’t know what is, they can’t even manage capital markets, much less things that require long-term thinking like infrastructure. These things naturally fall to the government, and as much as bureaucrats have been belittled by the ’government is bad’ thieves of the past 30 years, that’s who we need managing long-term infrastructure. There is a reason great works have always been run by government, because that’s only way they work without getting ripped of by the greedy.
— Kurt Marin