Interesting article on the state of cleantech investing…and how to get non-”home run” investments to continue to grow into real companies that solve our energy problems.
Originally posted on Gigaom:
Recently there has been significant discussion about what constitutes financial success in cleantech. At a minimum, VCs want 10X returns on a few deals to get excited about a sector. The company I founded, SunEdison, and many other deals fell short of this goal, good returns, but not 10X returns. So now most cleantech funds have to go back out to investors with sub-par return results and raise a new fund – not an easy thing to do these days.
Some folks, like my friend Sunil Paul, are pushing the CleanWeb. This is an asset-light investor play that is an offshoot of what Sand Hill Road VCs like to do, companies like Sidecar and Opower. Given that 20 percent plus of all energy can be offset with ICT (Internet Communications Technologies) this is a very plausible way to go. However, this is unsatisfying for me.
Fundamentally, energy efficiency and asset light approaches are essential, but not a sufficient solution set to bring us to 80 percent or more emissions reductions necessary to get us on the right path for climate change. We have to be able to deploy advanced technologies in vehicles, electricity generation, agriculture, water, building retrofits, and other core sectors.