Adventures in Cleantech

7:45 am - Tue, Jan 10, 2012

6 notes

Trouble w/ Numbers - Cleantech in 2011

Despite some good news, the positive numbers for Cleantech in 2011 hide a few worrisome trends.

First, the positive. The numbers make sense and can be correlated! The Cleantech Group LLC’s latest cleantech VC and M&A stats very much back up what was provided last month in the State of Cleantech VC by Matthew Nordan of Venrock.

Cleantech investments, across the board, are maturing.  

The result is a marked increase in later round and exit activity, including a record year from M&As ($41.2 billion).

The positive take from this is that the senior class of cleantech investments, just runts in the early 2000s, are spreading their wings and soaring out into the world. There is exit potential in the cleantech space! Who knew!

Even better, the total amount ($6.81 billion) and total number of transactions (470) both showed significant increases over 2010.               *Applause*

All good, right?

Not necessarily. As Matthew pointed out, the propensity has been toward larger later-stage deals at the expense of early startup rounds. The total number of deals and the amount of money invested is moving down the growth cycle to more mature companies.

The Cleantech Group did not capture (or perhaps, convey) this data though if you read between the lines, you can catch a hint of this truth. 

Whither early-stage cleantech startup funding?

Early-stage investment is the lifeblood of the space. For VCs looking to put large swaths of capital to work at later rounds, my warning is that the pipeline may dry up.  

Challenge or opportunity? Both, certainly, for those of us who focus on these early-stage investments.

So let’s not get too excited about all those bloated Series D rounds raised by fusion and hydrogen companies and keep cracking on finding true value in superstar entrepreneurs.