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What does the Future Hold for Cleantech as Venture Capital Investment Falls?

By Joao Peixe | Tue, 24 July 2012 22:49 | 0

A recent report on venture capital investment in clean technology was released by Cleantech Group, and on the surface suggests that the clean tech industry may be in trouble.

The report states that:

Measured by dollars invested, cleantech venture investment fell 14 percent compared to the previous quarter ($1.88 billion) and was off 25 percent from 2Q11 ($2.15 billion). The number of deals recorded in 2Q12 was 155, compared to 197 in 1Q12. The tally may rise again once all investors have reported all deals.

Although Sheeraz Haji, the CEO of Cleantech Group, told the press that it was not all bad news. “Despite headwinds facing the sector and global economic instability, we continue to observe top tier funds such as Khosla Ventures, Kleiner Perkins, NEA, and others actively investing into cleantech.”

Dallas Kachan of Kachan & Co. told the Green Sceptic that the reports results are not a surprise. “The dip in cleantech venture capital this year is not unexpected. We forecasted a decrease in cleantech VC in 2012 due to a tightening in the investor fundraising climate, waning policy support in the developed world, perennial concerns about IRRs in cleantech and macro-economic turbulence and other factors.”

So it seems as though cleantech projects may struggle to find the funding that they need in the future, and that could have a negative impact on the development of renewable energy technologies.

Are we doomed to fall back under the yoke of fossil fuels?

Well actually no. Venture capital is not the only money to be invested in the sector. Big companies are becoming more and more involved in cleantech investing, filling the gap left by venture capitalists.

Kachan claimed that some of “the largest companies in the world are buying their way into clean technology markets, supplementing the role of traditional private equity and evidencing a maturation of the cleantech sector. A decrease in venture is being made up for by a rise in corporate involvement in cleantech.”

By. Joao Peixe of Oilprice.com

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