28 March 2007

Clean Tech: CNN reports on "Dirty side to clean energy investing"

Steve Hargreaves writes on CNNMoney.com about the increase in venture capital investments in the Clean Tech sector, which The Green Skeptic reported on last week: Investors. Hargreaves asks whether this is a good thing.

"Venture capital is sexy: The glamour of bringing a new business to market, the promise of big returns, the risk of losing it all," writes Hargreaves. "There's no doubt this fast money plays a big role in building the businesses of tomorrow - especially those in the burgeoning alternative energy sector, which has seen funding triple over the past four years.

"But venture capital investors often bank on a relatively quick payback, and have high expectations for the firms they back. Those expectations have sparked debate among renewable energy financiers: Is too much venture capital money a bad thing?" Hargreaves writes:
Venture capital flowing to renewable energy firms has surged to almost $3 billion last year from just over $1 billion in 2002, according to the data tracking firm Cleantech Venture Network.

"There's just a ton of money trying to invest in companies," said Matt Cheney, head of MMA Renewable Ventures, a San Francisco-based renewable energy finance company.

That's good for startups looking for cash, so long as they can become profitable relatively quickly.

The typical time frame for venture capital firms - which provide cash and provide management expertise usually in exchange for part ownership - is three to five years, according to one venture capitalist.

"Money doesn't have a lot of patience in general," said Cheney. "I'd say eight out of 10 of these operations don't go anywhere. And for those eight, it gets pretty ugly."
Read the full article here: CNNMoney


Unknown said...

i think this is irrational. venture funds don't look for 3 years - more like 7. and sits naturally between grants and private equity or debt.
if this stuff is going to work, it's going to be because it makes money. i wish that the people who know about the technologies weren't afraid (philosophically) of the only system that we know works - profit-driven commercialization.

The Green Skeptic said...

Amen. There is "suspicion" about motives on both sides of the bed. But I couldn't agree more: turning greed to green is the only way this change is going to work.