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Advanced Materials: A Dark Horse to Watch

Sheeraz Haji
by | May 16th 2013
Posted in Cleantech Investment Insight

On May 10, 2013, Cleantech Group, Silicon Valley Bank, and Wilson Sonsini Goodrich & Rosati hosted a Power Breakfast focused on Advanced Materials, featuring participants from BASF Venture Capital, Kleiner Perkins Caufield & Byers, Dow Chemical, Applied Materials, and a number of promising startups in the space.

From graphene’s astounding material properties to cleaner polymer feedstocks, advanced materials innovations are quietly transforming cleantech behind the scenes. In our 1Q13 Quarterly Investment Monitor, we asked if Advanced Materials could be the dark horse of the cleantech sector. After a dynamic discussion during our quarterly Power Breakfast, the answer looks to be a resounding yes.

The conversation opened with investors’ interest areas in this space. While the VCs favored disruptive technologies that could upend entire industries, corporates leaned toward incremental innovations to augment their core materials capabilities. All parties agreed on the difficulty of adapting entire supply chains to new materials, as well as the application discovery process to determine target markets in the first place.

Last week’s discussion also turned to the importance and difficulties of forging successful partnerships. Besides capital, corporate partnerships can provide startups with support from business units, access to customers, pilot …

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Cleantech Goes Social: Cleantech Group and Facebook challenge you to use social to accelerate cleantech

Sheeraz Haji
by | January 29th 2013
Posted in Cleantech Investment Insight

Cleantech products and services are inherently social. When my neighbors install solar panels on their roofs or buy an EV, they want to tell all their friends about it. Demonstrating how one is contributing to the broader public good by reducing their impact on the environment has become somewhat of a status symbol (at least in Berkeley!). However, the cleantech industry has not done a great job of using the web in creative ways to amplify the social aspects of cleantech products and services.

With that in mind, Cleantech Group and Facebook are excited to announce “Cleantech Goes Social,” a contest that aims to  harness the power of Facebook’s billion-person network to accelerate cleantech adoption and engage the public on sustainability issues. We are challenging cleantech companies and others to find new ways to use Facebook to accelerate cleantech, whether it’s through an app on the Facebook platform or a new method of integrating Facebook into products and services. We are asking contestants to tell us their story about how they will use Facebook to address energy and resources challenges, accelerate cleantech adoption, and engage the public in dialogue about sustainability issues.

The winner of the contest will …

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Looking for Cleantech Angel Investors

Sheeraz Haji
by | June 15th 2012
Posted in Cleantech Funds and Investors, Cleantech Investment Insight

I have been getting more calls from early-stage cleantech entrepreneurs looking for seed funding. Many of these startup CEO’s have already met with a number of the focused VCs and figured out that their venture is too early for them.  A few have tried to pitch the Band of Angels or the Keiretsu Forum unsuccessfully. Yet they appear to be strong entrepreneurs with a great idea. I struggle with where to send them. I know of a few angels investing in the space but they are limited by the number of deals they can do as well as the size of their investments. Where’s the Reid Hoffman for cleantech?

A number of family offices have organized themselves to share dealflow and form investing syndicates. This is terrific news for the sector, and has significantly increased the number of investors who can invest directly into cleantech startups. However, this does not solve the early-stage fundraising challenge. Most family offices prefer not to lead deals and hesitate to participate in deals that are deemed too risky.

Many venture firms claim to invest in seed cleantech deals, but few have done so in the past year or two. Khosla Ventures is the exception. …

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Who’s Brave Enough to Start a Solar Fund Today?

Sheeraz Haji
by | June 1st 2012
Posted in Cleantech Investment Insight, Solar

The other day an investor was updating us on his fund’s activities. He said their partnership had decided to focus on – you won’t believe this – capital efficient investment opportunities. Shocking! He was then quick to point out that they had only invested in one solar deal, and they were definitely avoiding solar going-forward. Sound familiar?

This conversation got me thinking – is anyone out there brave (or crazy) enough to start a new solar fund today. I’m not talking about folks willing to invest only in the downstream side. It’s well-understood that companies like SolarCity and SunRun are benefiting from cheap panel prices, government incentives, and financing vehicles. Many investors have noticed (for example, Silver Lake Kraftwork’s first investment was in Solar City); SunRun just raised another $60 million. I’m wondering if you know of any investors willing to focus new investments on solar technology (manufacturing) companies.

Why? My basic rationale is that it feels like the pendulum has swung too far to the negative, and there should be a plethora of solid solar companies to invest in at very reasonable valuations. Our i3 database captures almost 1800 solar companies. Yes, I know it’s tough out there …

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Why Water

Sheeraz Haji
by | May 18th 2012
Posted in Cleantech Investment Insight, Water

It’s not priced appropriately; regulation is fierce; it’s so fragmented (by geography, technology, and industry); channels are difficult; investment is scarce; water utilities and their engineering firms don’t want innovation … I’ve heard it before: All the reasons why it’s so hard to build a successful water startup.

However, I believe something has changed, and water is now poised to become a top cleantech theme and investment sector over the next few years.  Why?

  • Water pricing will (and has already) improved to more realistic levels;
  • Hidden costs (e.g. from energy costs to move water or property damage associated with water) will start to become more visible – especially to corporations;
  • Businesses will sweat the risks to reputation, product quality, up-time, and supply chain. Can a beverage factory operate without access to clean water? Can a mining company move forward with a project without the community’s trust that precious water resources will be protected?
  • Corporates are investing in water. Exhibit A is Ecolab’s recent acquisition of NALCO or ABB’s recent investment in Takadu;
  • Entrepreneurial talent is starting to pay attention to water, and we shall see some outstanding repeat entrepreneurs venture into the space.

Those of you who know the …

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Global venture investment declines, but corporates step up and the IPO window cracks open

Sheeraz Haji
by | April 6th 2012
Posted in Cleantech & IT, Cleantech Investment Insight, Company Insight, IPO

Venture capitalists might be running short of cash. This past quarter (Q1 2012), global venture capital investments declined 19% from the prior quarter and 31% year-over-year (see our press release here). On a brighter note, the total number of deals recorded in the quarter was 185, up from 176 in Q4 2011, and the tally will rise again once we round up other investors who have not yet reported all their deals for the quarter.

Despite an investor bias towards later-stage investing, early stage deals increased this quarter. The proportion of early stage deals increased from 37% (Q1 2011) to 44% (Q1 2012). The absolute number of early stage deals increased from 67 in Q4 2011 to 81 this past quarter. Huh? What’s going on? I think investors are creating a “barbell effect” – favoring hot early stage deals with repeat entrepreneurs and capital efficient business models as well as later-stage companies that already have a proven product and business model (e.g. SolarCity). In the middle, life is tougher. These “in the middle” Series B and Series C companies already have institutional investors but often are still working to remove technology and market risk from their business. They …

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What does cheap natural gas mean for cleantech?

Sheeraz Haji
by | February 17th 2012
Posted in Companies
Tags:

Wholesale natural gas prices have been on a steady downward slope, hovering at around $2.50 per million BTU. The latest official supply figures show the US has three trillion of cubic feet of stored gas, up 25% from this time last year. All this talk of cheap and plentiful natural gas has me wondering: What does this mean for cleantech?

Cheap and Abundant Natural Gas

The obvious answer is: This is bad news. Solar, wind, energy storage, demand response, energy efficiency – anything that competes with natural gas peaker plants – will suffer as natural gas becomes an increasingly attractive option for energy companies. As I travel the US, I’m finding increasing evidence from utility and energy company executives to support the thesis that natural gas will put increasing pressure on renewables. The EIA’s prediction for our future energy mix also supports the belief that natural gas will grow its share more quickly than other options including renewables.

Biogas companies will also feel some heat. Efforts to capture, clean and utilize biogas (e.g. from landfills or wastewater treatment plants) make much more sense when natural gas sells for $10 per million BTU or more. At $2.50, it’s …

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Trends for 2012: no cleantech-pocalypse?

Sheeraz Haji
by | February 9th 2012
Posted in Cleantech Investment Insight, Geographical Insights, Venture Capital

The cleantech boom went bust! Solar is dead. Climate change is a hoax. We have all heard the doom and gloom. If you only read these sensationalist headlines you might think cleantech is dead.

Don’t believe the hype! Cleantech did not implode. While 2011 was a challenging year for cleantech, the industry continued to grow and there’s plenty to look forward to in 2012. With all the noise, you might not have realized how quickly solar installations are growing around the globe. For example, in the US solar installations grew more than 65% year-over-year. National and local governments are embracing cleantech like never before as they search for ways to stimulate their economies.  Even though a number of venture funds have struggled, we saw global cleantech venture flows grow 14% to $9 billion last year.

Global enterprises invested in cleantech at record levels: Last year we tracked $41 billion in global M&A transactions in cleantech, up 153% from 2010. Big corporations from every industry and from across the globe are evolving sustainability programs into growth-oriented strategies to source cleantech innovation.  French enterprises have led the way. Some groups have pursued an acquisition strategy: Schneider Electric, for example, made eight …

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Why I believe 2012 will be a record year for cleantech innovation financing

Sheeraz Haji
by | January 24th 2012
Posted in Cleantech Investment Insight, Corporates in Cleantech, IPO, Venture Capital

The death of cleantech venture capital has been greatly exaggerated. Yes, there were a few massive failures in 2011, and of course it’s been difficult for a number of cleantech venture capitalists to raise funds. However, cleantech did not implode, and neither did venture capital.

On our recent Quarterly Investment Monitor webinar I predicted 2012 will be a record year not realizing this was a particularly bold claim. However, judging by the number of comments I have received from clients and colleagues, I am realizing this may be a contrarian view. Here’s my rationale:

1) Math – We tabulated just under $9 billion in global cleantech venture investments in 2011. Since 2005, cleantech venture investment has increased each year excepts for 2008 to 2009 when we experienced the mother of all economic crises. On average, cleantech venture investments have grown 26% per year since 2005. If we use this average rate to extrapolate, we will see $11.3 billion in 2012. That’s a pretty big step up from the current record year – 2008 which saw $9.5 billion.

2) I believe we will see a couple of rock-star IPO’s in 2012 and this will drive renewed enthusiasm in cleantech and specific …

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Please Join Me in San Francisco

Sheeraz Haji
by | December 16th 2011
Posted in Cleantech Investment Insight

With the holiday season in full swing and a new year just around the corner, we at the Cleantech Group are focused on identifying the key sector trends and opportunities poised to shape the 2012 global clean technology agenda.

I am pleased to invite you to join me in San Francisco, March 26-28, as we explore these opportunities and discuss the business, investment, and partnership strategies that will help you make the strongest decisions involving cleantech innovation in 2012.

Cleantech Forum San Francisco is internationally recognized as the premier cleantech event influencing global venture and equity investment, business formation, mergers and acquisitions, and government policy. More than 700 professionals at the forefront of cleantech innovation and investment – corporate leaders, investors, entrepreneurs, and policy makers – come to San Francisco to directly engage with the leaders of global cleantech markets.

The 2012 Forum will mark our 10 year anniversary and the theme is “The Power of Global Partnerships,” an exploration of how strategic relationships – between entrepreneurs, corporations and governments – are playing an ever more important role in the future of clean technology.

We recently announced our first round of speakers and a preliminary agenda that includes David Crane, …

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