Clean-technology ventures have become something of a non-starter in investment circles. While a few rockstar companies appear to be succeeding in the industry--Tesla announced a profit of $11 million last quarter--there have been more than enough failures to deter even the most adventurous VCs. Clean tech venture investment dropped 29 percent from Q4 2012 to Q1 2103, but a few brave souls are staying the course.--Francesca Louise Fenzi
Khosla Ventures has become almost synonymous with clean tech and renewable energy. Dubbed Mr. Clean Tech, billionaire venture capitalist Vinod Khosla has backed more than 40 start-ups and public companies in the sector, sinking a considerable chunk of his own change into struggling alternative fuel operations like Amyris, Gevo, and KiOR. But Khosla is sticking by his guns--or rather, his ideals. Clean tech start-ups are operating in “humongous markets,” and while “disruptive technologies” are often associated with greater risk, they also hold possibility of greater reward. He told the Wall Street Journal recently: “There’s no reason for us to back off.”
Marc Andreessen of the investment firm Andreessen Horowitz has previously stated that he is not particularly interested in clean tech deals. But that hasn’t stopped him and partner Ben Horowitz from investing in alternative transportation companies like Lyft and SideCar.
Microsoft icon and multi-billionaire philanthropist Bill Gates is a selective clean tech investor. “It’s crazy how little we are funding this energy stuff,” he told the Wall Street Journal last February. But he also understands what’s holding investors back. High-profile flops like those of Fisker and Solyndra have done little to assuage the doubts of investors--who, after all, want a return on their investment. Still, the successes do exist, according to Gates. He has personally invested in a handful of renewable energy start-ups over the past year, including the battery company Aquion Energy and algae fuel producer Sapphire Energy.
Kleiner Perkins Caufield & Byers, is perhaps one of the oldest names in clean tech capital--investing in 88 clean-technology companies since 1999. But the firm, among those bitten by the fading prospects of Fisker Automotive, has been forced to reevaluate its investment strategy. In 2010, the group hired "Queen of the Net" and Morgan Stanley alumna Mary Meeker to steer its investment portfolio. Now, the firm's green portfolio companies have a more stereotypical tech slant. Among them: smart thermostat manufacturer Nest and OPower, a Web platform that offers energy-efficient solutions for utilities companies.
Paypal co-founder and philanthropist Peter Thiel probably wouldn’t describe himself as a “clean tech crusader”--in fact, the billionaire has been one of the sector’s most vocal skeptics. Yet Thiel sank more than $37 million into the renewable energy company LightSail last year. “For far too long, the clean tech industry has been driven by politicians and ideologues who trade people’s taxes for dreams,” he wrote in a press release. “But hype is not a sustainable energy source. It’s time to find honest companies that can develop technologies that stand on real innovation.”
It stands to reason that utility giants like Shell, British Gas, and General Electric should be cast as the villains in the green tech start-up story--right? Not so, according to Cleantech Group CEO Sheeraz Haji. Existing fuel and electricity companies have been "incredibly active in the space," he says, pouring money into projects that focus on making their industries more efficient and eco-friendly--presumably preserving their bread-and-butter. British Gas recently led a $10.6 million investment in the clean energy start-up 4Energy, which creates low-energy cooling systems.
The energy venture capital firm Chrysalix takes a realist's approach to oil and gas. Rather than take big investment risks on companies that depend on a mainstream rejection of fossil fuels, the Canadian investment group is more interested in start-ups aiming to modify the extraction and refinement processes--even in a small way. "Oil and gas will be with us for a long time. If we can clean that up we will do the world a great service," CEO Wal van Lierop told the Associated Press earlier this month. Among their portfolio companies: Glass Point, a company that creates solar-powered generators specifically for the oil and gas industry.
Read more: What's Hot Now in Clean Tech