cleantech
cleantech insights

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

Sheeraz Haji

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

Sheeraz Haji

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 …

How do you say Zipcar in French? – Maybe something to think about after 13 April

Stephen Marcus

By now, we all know that Zipcar has priced its IPO at $14-$16 dollars per share and is planning a NASDAQ IPO for 13 April. We also know that despite bringing in over $180 million in revenue, the company reported a $14 million loss in 2010. So why, in my opinion, is Zipcar destined for success? What makes Zipcar different from the numerous other car sharing companies using similar, if not identical business models?

I decided to turn over a few stones to investigate. To find out more, take a look at the Company Insight Profile (subscription required).

Sales + Scales – On a company-wide level, Zipcar’s comprehensive geographical reach is another differentiator vis-à-vis smaller competitors because its technology platform and operational backend can be spread over a wider consumer base, and it has consequently refined its business operation with over 10 years of experience.

A prime example can be seen when looking under the hood of Zipcar’s acquisition of UK-based Streetcar. In 2010, Zipcar’s established markets brought in an average $28 million of revenue each and were operating at above a 20% margin, much higher than Streetcar’s marginal loss in London despite the market being of equivalent size.

Revenue

Weekly cleantech investment highlights

Stephen Marcus

Each week our research team tracks cleantech transactions across the globe. This week we recorded 15 venture deals, 4 fund announcements, 20 M&As and 2 IPO related announcements. Below are some of the highlights. Cleantech Group subscribers can see the full roundup of all the deals here.

VC, private company and corporate investments

Over $225 million was raised by 15 cleantech companies globally. The two largest deals were:

  • Canada-based GFL Waste & Recycling Solutions, a provider of waste and water treatment services, raised C$105 million ($103 million) from Roark Capital Group. Roark invested C$60 million at closing and has committed C$45 million more for organic and acquisition growth opportunities.
  • Virginia-based Opower, a developer of energy efficiency and smart grid software, raised $50 million from Kleiner Perkins, Accel Partners and New Enterprise Associates.  The funding will go towards launching new products in 2011 and scaling up to quadruple its current customer base.

Funds

Announcements were made by 4 funds looking to raise over $300 million. The top 2 were:

  • UK-based technology-focused venture capital firm Rockley Group doubled the size of its China fund to $200 million following an agreement to raise a $100 million fund in partnership with the Shanxi

Heard of ChiNext? It is the most active stock exchange in cleantech

Stephen Marcus

Launched just over a year ago, ChiNext has provided a platform for 43 high-growth Chinese cleantech companies to IPO raising a total of $5.4 billion. It has been a significant factor in turning the power of global cleantech IPOs on its head; cleantech IPOs on ChiNext accounted for 47% of the money raised out of all cleantech IPOs in China and 37% of the capital raised in cleantech IPOs globally during the year since its launch. It is also seen as one of the most important milestones in the nation’s independent cleantech strategy based on scientific development which was outlined in China’s 11th 5 year plan.

Whilst the new exchange has fervently grabbed the attention of the Western cleantech community, the majority of Western investors understand very little about the exchange and the cleantech companies listed on it.

The 43 cleantech IPOs on ChiNext is made up from companies in 10 industry sub-sectors ranging from air & environment to wind, emphasizing the diversity of China’s innovation ecosystem. Perhaps more interestingly, 31 out of these companies (72%) are backed venture capital investors, 62 of them in total, and almost all based in China. ChiNext is therefore emerging as a powerful …

Weekly cleantech investment highlights

Stephen Marcus

Each week our research team tracks cleantech transactions across the globe. This week we recorded 17 venture deals, 16 fund announcements, 12 M&As and 5 IPO related announcements. Below are some of the highlights. Cleantech Group subscribers can see the full roundup of all the deals here.

VC, private company and corporate investments

Over $130 million was raised by 17 companies globally. The two largest deals were:

  • California-based Champlin Wind Power, a developer of large scale wind farms, secured an investment of up to $50 million from venture capital investor Good Energies. The company, now known as Champlin-GEI Wind Holdings, will use the new funds to develop between 100 MW and 500 MW of wind projects in the Western U.S.
  • Finland-based electric vehicle engineering company Valmet Automotive raised €20 million ($27.8 million) from state-owned Finnish Industry Investment and private equity investor Pontos Group in exchange for a 34% shareholding. Engineering group Metso, Valmet’s parent company, will continue to be the majority shareholder. Valmet is an engineering and manufacturing partner for the electric cars THINK City, Golf Car Garia and the Fisker Karma.

Funds

Announcements were made by 16 funds looking to raise nearly $5 billion. Highlights included:

  • The Shanghai