NEW ENERGY TO BOOM IN ‘08

The substance of New Energy is the men and women in the solar, wind and marine energy industries who get out on rooftops or stand up the turbines or ride out on the waves. This action is a long way from where most Venture Capitalists (VCs) played during the digital revolution.

If they do not understand the time frame for the bets they are making, the VCs may be in over their heads in their enthusiasm for “CleanTech” despite this survey predicting big investment in the coming year. IPOs have generally not been what the VCs were used to during the glory days of the digital revolution when something could happen on the desk of an electrical engineer and quickly make its way to a voracious marketplace.

The market is hungry for New Energy, there is no doubt of that. And there is a desperate need to do more with wind and sun and wave, to make them more efficient, to lower the cost per watt and increase the watts/hour.

Little of this is going to happen for the VCs the way it did in the 90s. Those who understand the time frame they are dealing with will succeed in the long term because in the long term anybody who owns clean energy owns the most valuable commodity in the world. Those who don’t have the patience to let their bets pay off will lose short term and go looking for the Next New Thing.

Mark Heesen, President, National Venture Capital Association: “[I]f the venture-backed IPO market in the U.S. doesn’t begin to open in 2007, the VC industry will begin to leverage alternative markets and buyers for their portfolio companies…An industry-wide shift toward these new exits has the potential to fundamentally transform the venture capital business model.”

The money kept going to CleanTech in 2007. (click to enlarge)

Venture Capitalists Say Rush to ‘Clean Tech’ Will Continue in ‘08
December 18, 2007 (WRAL-TV/Raleigh, NC)

WHO
Venture Capitalists (VCs) of the National Venture Capital Association (NVCA), Mark Heesen, President; Ira Ehrenpreis, general partner, Technology Partners and chairman, 2008 CleanTech Investor Summit

WHAT
79.5% of 170 VCs surveyed by the NVCA expect investment in “CleanTech” to increase in 2008.

The value of the investments keeps rising. (click to enlarge)

WHEN
Investment in CleanTech grew to a record $2.6 billion in the first 3 quarters of 2007.
CleanTech investment topped out at $1.8 billion in 2006.

WHERE
CleanTech, the favored acronym for New Energy and New Energy technologies in Silicon Valley and other digital revolution centers. This report comes from North Carolina’s influential Research Triangle Park.

The money seems more interested in the U.S., China and Israel than Europe. (click to enlarge)

WHY
- According to 61% or respondents, there is concern the CleanTech sector is presently overvalued. This may be because the emphasis is on breakthrough technologies, while actual wind, solar and even marine energy installations are still expanding faster than ever.
- 71.3% of VCs expect total investing to be in the $20 to $30 billion dollar range.
- 12% of VCs predict CleanTech investment will decrease. 8.4% expect investment to level off. Just over half expect increased media, biotech or Internet investing. Some thought Internet and biotech investing would be flat. Many thought semiconductor, software and wireless tech investing would decline.

And it looks like it will keep growing. (click to enlarge)

QUOTES
- Ira Ehrenpreis, general partner, Technology Partners: “CleanTech will continue its pace as the fastest-growing venture category of the past several years…In its quest to solve some of the most important energy and water issues of the 21st century, the sector will also attract the interest of some of the best and brightest entrepreneurs, executive teams and technologists…[T]he diversity and breadth of the CleanTech sector will evolve such that areas beyond solar and biofuels will capture more venture dollars over the coming year than ever before…”