Why Venture Capital Isn't Embracing CleanTech
In 2011, I did a talk on clean energy and transportation at the incredibly palatial Biltmore in downtown Los Angeles (pictured), at the conclusion of which a gentleman introduced himself and told me about a zero-emissions vehicle he was building. We stayed in touch, and just now he wrote to me regarding my post “Heard It At the Low Carbon Investors Conference” as follows:
Unfortunately Cleantech is now a “dirty word” among the VC community. Investment is plunging especially in early stage ventures, and it’s plunging from an already decimated base. The VC’s are definitely a herd community and if Sequoia or Kleiner Perkins declares that warm melting Ice Cream will become the next “hot” thing, you’ll see hordes of VC’s investing in Ice Cream warmer machines and technology.
I respond:
You’re absolutely right about the herd mentality among VCs. But regardless of how they may view it today—and regardless of what it’s called, “cleantech” (renewable energy, storage, efficiency, smart-grid, alt-fuel transportation, desalination, sustainable agriculture, etc.) is going to be with us for a very long time.
This is an inescapable truth (though it’s hard to see how anyone would want to escape it) for several reasons, chiefly that the cost of all this stuff is plummeting so fast and the ROI rising so steeply that it’s totally compelling financially. The other main reason is that our society is starting to get a little cheesed off at the trillions of dollars in externalities—all the greenhouse gas emissions and outright poisons that are being dumped into the air and oceans. It won’t be long until there is a huge push to internalize those costs, which will in turn drive an enormous amount of additional spending in cleantech.
The reason the VCs don’t like it is summed up in the concept of “opportunity costs.” They’d much rather be hunting around for the next Google of FaceBook—something with extremely low capital costs and fantastic possible valuations. This, btw, does not mean that overall investment in cleantech is struggling, as I pointed out here; the big banks have entire business practices associated with renewable energy alone.
VC’s are simply looking for profits and it seems that their mentality is like the old bounty hunters. Another point maybe is the image of cleantech portrayed by media i.e. something like a matter of decoration than something for use. They have no idea that new researches and inventions can alter the table soon.
Craig, you seem to have a good sense of the pulse of the VC world. Would you say as a group they tend to be somewhat conservative? This seems to be somewhat implicit in your characterization of VC as having a herd approach to investing. I understand that the label “conservative” can be somewhat polarizing in our political environment but I an considering the traditional environmental connotation. Traditionally those who did the most to preserve the environment (parks, national forests…) were conservatives. There is also in most of us some desire for an unchanging stability.
I wonder then how much the investment goals of the VC are at conflict with their nature. This might explain the desire to invest in existing infrastructure or areas that may augment rather than change our foundations.
A “tell” for this inner perspective might be a focus on costs rather than investment. “Investment” is an optimistic term. “Cost” seems more pessimistic. If any of this speculation holds any water then perhaps the inventor or entrepreneur may sometimes need a “translator” to help convert their ideas from a “cost” to an “investment,” for the VC.
Thanks for this. Please see: http://2greenenergy.com/2015/06/14/are-venture-capitalists-conservative/.
Craig,
As you know, I always admire your optimism and dedication to the upside of your passion. As a person, and advocate, this is a very admirable trait. However, it does tend to make you a little blind to the harsher side of reality. You tend to see the world as it should be, and you hope it will be, not as it is, and probably will be.
Venture Capitalists, ( merchant/investment bankers) should avoid.passion, morality, ideology or emotion. That’s for philanthropists and entrepreneurs.
The majority of Venture Capitalists invest other peoples money. Although those that invest with VC’s expect a higher return on capital than more conventional banks, it’s not a crap shoot !
Most VC’s are very competitive, but must still perform a lot of due diligence, analysis, and careful risk assessment, before investing. (it’s not like the movies !).
The major banks have very little interest in investing in clean tech. (except as a PR exercise). Nearly all conventional banks, only invest in clean tech, (with much fanfare) when governments guarantee against losses, or other asset considerations exist.
VC’s, on the other hand, take greater risks because the profits from successes, outweigh the losses.
Every VC attracts applications from hopefuls, ranging from the genuine (rare) to the commercially impractical. A large percentage fall into the bizarre, downright weird, barking mad, or dishonest hucksters. (sometimes a combination of all four!).
Over the last twenty years, I’ve seen hundreds of enthusiastic zero-emission vehicle builders. Many of these were just ludicrous, had part of a good idea, or were just plain unrealistic. (A few were just crooks).
The automotive industry is extremely difficult. It’s hugely capital intensive,fiercely competitive, and provides very low return on invested capital. Alternate fuel vehicles, face the problem of massive investment, and very difficult logistics. Elon Musk is a very, very remarkable exception. He’s a VC’s dream come true. ( I must declare my interest, being an early investor)
Elon Musk was already successful, yet he astounded the world with his ability to transform himself from IT/Dot.com/Silicon valley wunderkind, to industrialist. He’s the exception that comes along once, in every generation. Musk is a very complex individual, with the right combination of obsessive determination, vision, charisma, discipline and formal business training, to bring together all the ingredients necessary, to take a project from conception to commercialization.
But, he’s very much the exception that proves the rule. Others have tried to get EV ventures off the ground, including some very highly qualified auto-industry figures, have all collapsed into failure, losing billions of investors money.
In fact most “clean tech” ventures from small entrepreneurs, have failed. The percentage of successes has proved very, very small.
Too many VC’s have lost money in “clean tech”. In general, although the public says it loves clean tech, they don’t really care, and certainly not enough to pay a premium for clean tech.
VC’s certainly don’t have a “herd mentality”, but all VC’s must deal with certain common factors. VC’s are always conscious of the very long list of spectacular failures in “clean tech”, with very few success stories. In contrast, although the IT/Dot.com/Silicon valley boom produced many failures, it also produced a percentage of spectacular success stories.
In the end it comes down to analysis. (The best and earliest example of practical analysis was the Benjamin Franklin method.:) )
As for your idea that the public will start ” to be :-
“little cheesed off at the trillions of dollars in externalities—all the greenhouse gas emissions and outright poisons that are being dumped into the air and oceans. It won’t be long until there is a huge push to internalize those costs, which will in turn drive an enormous amount of additional spending in cleantech.”……..,
I’m afraid you’re must still be living in 2006 !
Joe Public is rapidly losing faith in “greed brand” propaganda. Joe Public is more interested in the economy. Outside the US, green/left politicians are losing adherents, and elections. The “green media” is losing readership, even on the internet. Like most movements past their zenith, the faithful make the most noise, as numbers decrease.
Both “climate change” and ” global warming” , are beginning to lose adherents, as taxpayers become aware of the huge losses incurred. Too many false, and widely exaggerated claims that haven’t occurred. Too much fanaticism and moralizing by academics and the young, spouting confident predictions, that later have to be constantly “readjusted’ when proven inaccurate.
It’s all got too much for Joe Public ! Perhaps in America you may not have noticed, but all over the world, conservative governments are replacing high spending green-left governments.
In the US, the political centre-right is hampered by the emergence of aggressive far right crazies, paralyzing the Republican Party’s ability to field a popular candidate, to match the very experienced Democrat, Hillary Clinton.
But Hillary, isn’t Bill ! Hillary’s far more conservative. She’s not going to jeopardize her legacy with economic mismanagement.
In this new environment, all clean-tech will have to prove itself economically viable. It will be no use trying to rig the market, with “externaties” or other ideologically based arguments. Governments, can’t continue to borrow money, to prop up uneconomic industries for ideological purposes.
A Hillary Clinton administration, will have to face the problem of shrinking government revenues, and increased demand for government services. She knows that only cash flow from the oil-gas industry, keeps the US afloat. US prosperity rides on an energy resurgence. Hillary Clinton is first, and foremost , a politician.
Sharks don’t commit suicide. !
A Closer Look at Fossil and Renewable Energy Subsidies
June 10, 2015
By Susan Kraemer
A new study by the International Monetary Fund puts the total cost of fossil fuel subsidies at approximately $10 million a minute globally, when health costs and environmental degradation are included, never mind the effects of a destabilized climate in future centuries.
The most perverse of these subsidies are aimed at finding new reserves of oil, gas and coal, even though it is generally understood that these must be left in the ground if we are to avoid catastrophic irreversible climate change.
When drilling for oil was a start-up industry in the 1890s, it cost today’s equivalent of $500 a barrel to get it out of the ground, according to UC San Diego’s James Hamilton in his study Oil Prices, Exhaustible Resources, and Economic Growth.
The first federal tax break for the oil and gas industry came within its very first years. The Intangible Drilling Costs (IDC) still allows the industry to write off most drilling costs, like the tertiary injectants deduction, in full, immediately, rather than at normal business depreciation rates.
Enacted in 1926, the Percentage Depletion Tax Credit actually increases when prices go up, as it allows companies to deduct a flat percentage of income received from oil or gas wells, frequently resulting in tax deductions in excess of investment.
The Independent Petroleum Association of America describes the tax credit this way: “This deduction is a standard part of the American tax code that supports the development of U.S. oil and natural gas that would otherwise be uneconomic to produce.”
When coal was a start-up industry (in the U.S.) in the late 1700s, it was given tax-free status, smelting was given incentives, and competing old world coal imports were taxed at 10 percent. Four centuries later, coal is still receiving $5 billion in incentives a year. The result is coal-fired electricity at about US $0.04 per kilowatt-hour (when burned in power plants that are already built, the costs of which have already been passed along to ratepayers).
“There are dozens and dozens of tax credits for conventional energy,” said SolarReserve CEO Kevin Smith, based on the knowledge he gained in 30 years of building natural gas plants. “For example, if the Keystone pipeline goes ahead; the refineries who refine that type of alternative fuel get a 50 percent ITC. There are depreciation allowances for wells as they start to degrade, there are just a long list of tax advantages. And all of them are a permanent part of the tax codes.”
These and other oil and gas subsidies total about $7 billion a year in the U.S., according to Taxpayers for Common Sense Understanding Oil and Gas Tax Subsidies. The U.S. Congress has made these sorts of federal investments in each new form of fossil energy two centuries.
Permitting, Leasing Inequities, Too
State-level policies increase expenses for renewable energy project developers by making permitting onerous for new projects. In California for example, permitting has historically been almost nonexistent for fossil fuels, but has set a much higher bar for renewable energy.
Permitting solar farms in California can be a three-year multi-million-dollar process. Fossil fuel companies can simply declare on a one page form their intentions to drill next Friday. Further, land leasing costs are higher for solar and wind than for fossil fuels. Land leases for oil and gas were still at 1920s prices in 2009, when the BLM was setting market rates for the renewable industry.
The coal industry pays land rents for natural resource extraction on land that has been undervalued since the 1800s. In the last 30 years, the treasury has lost nearly $30 billion in revenue by undervaluing public lands in Wyoming and Montana where Powder River coal is mined, according to Tom Sanzillo, Finance Director at the Institute for Energy Economics and Financial Analysis (IEEFA).
Make Renewable Subsidies Permanent
It is almost impossible to reverse permanent subsidies in the tax code. It has never happened in the U.S., so some advocates believe that a more practical solution would be: if you can’t beat them, join them.
The coal industry’s PTC for producing refined coal is $6.71 a ton — in 2015. The wind industry’s $0.023 per kWh PTC keeps flickering out every few years. Renewables have been stymied by stop/start subsidies that almost seem designed to scare off investors, because none are permanently in the tax code the way fossil fuel subsidies are.
Uncertainty alone makes subsidies less effective. If the ITC and PTC were permanent, renewable investment would be more predictable, so supplying equipment for projects and capital cost would be less, bringing generation costs down. While some investors are able to stomach the risk of buying into renewables projects without knowing whether the tax credits will still be there when their projects reach fruition, most cannot.
Because subsidies for fossil fuels are permanent, the effect is much greater, because permanence provides a stable and predictable investment environment not given to renewables.
One way to create a level playing field with fossil fuels would be make the subsidies for wind and solar just as permanent as those for fossil fuels. Either that, or remove all subsidies for all forms of fuel, something very unlikely to happen.
Over the last half decade, the clean energy economy has emerged around the world as a major new opportunity for investment, manufacturing, and for jobs and environmental protection. A new report, Global Clean Power: A $2.3 Trillion Opportunity, explores scenarios for the dynamic expansion of electricity generated by renewable resources over the next decade.
The future trajectory of investments in clean power projects will be determined by the strength of policies adopted by G-20 countries. If clean energy policies are strengthened significantly in the coming years, the report projects that $2.3 trillion will be invested in clean power assets over the next 10 years, offering companies and countries enormous opportunities to compete for investments, jobs and export markets. Under current policies, however, cumulative investments would only reach $1.7 trillion over the next decade. In other words, strong policies would leverage an additional $546 billion worth of worldwide investment.
The three scenarios modeled in this report are as follows:
• Current Policies – This scenario assumes G-20 countries do not adopt any new climate or clean energy policies beyond those currently in effect.
• Copenhagen Policies –This scenario assumes G-20 countries adopt and implement the policies required to meet pledges made pursuant to the United Nations Framework Convention on Climate Change Conference of the Parties (UNFCCC COP) in Copenhagen, Denmark, in 2009.
• Enhanced Clean Energy Policies – This scenario assumes that G-20 countries pursue enhanced clean energy policies in order to further reduce greenhouse gas emissions and maximize clean energy investments.
In all scenarios, the center of gravity for clean energy power investments shifts to Asia, led by dramatic increases in China and India. Still, all countries stand to gain from adoption of enhanced clean energy policies. The United States is one of the three countries (along with India and the United Kingdom) that have the most to gain from adoption of aggressive clean energy policies, when enhanced policies are compared to current policies.
Craig please require all comments come only from those that use their real names. Otherwise BS like this gets on your blog by who knows who? Sounds like something the Koch brothers would write.
Joe Public is rapidly losing faith in “greed brand” propaganda. Joe Public is more interested in the economy. Outside the US, green/left politicians are losing adherents, and elections. The “green media” is losing readership, even on the internet. Like most movements past their zenith, the faithful make the most noise, as numbers decrease.
Les Blevins,
I’ve tried to be polite, and as gently as is possible to explain to you why it’s growing more difficult for 99% of “Clean Tech entrepreneurs” to attract funding.
In reality, no one want’s to risk money with fanatical ideologues ! In every boom there will always be a certain number of failures. Most of these failures can be identified by adherence to extreme political or ideological rantings.
Like all fanatics, they possess a lot of passion, but very little in the way of business skill.
Once the original, (usually taxpayer funded) boom investment dissipates, these fanatics continue to peddle their wares with increasing bitterness, and even less success.
Business requires some passion, but of a quiet, controlled kind. Business requires calm judgement, and persistent hard work in understanding the principles of the market place. “Winning” arguments with customers, just guarantees you no customers, (or investors) !
Venture Capitalists, invest just as much in the people behind projects and enterprises, as the projects themselves. People who persistently fail to secure funding, seldom examine their own defects, instead, consumed with self-righteousness, they blame others ( corrupt bankers, Koch bros, governments, stupid people) for their own lack of success.
The era of handouts and irresponsible investment in ” green industries” is hopefully ended. In the future, “clean tech” investment will have to prove itself economically viable, without governments artificially rigging the rules in it’s favour.
This will see most projects collapse or never get started. This isn’t a bad thing, as only truly valuable projects will receive support from both investors, and customers. It will be easier for investor, especially “Ethical Funds” to identify, solid, well managed and researched, “clean Tech ” investment opportunities.
” Climate change, global warming, peak oil , etc “, will no longer be magic passwords to open a cornucopia of funding, for half-baked, impractical, uneconomic schemes.
For worthwhile “clean tech ” projects, this will be a very positive development.
For hopeful “green entrepreneurs” like yourself, forget about the ranting, the bitterness, the Koch brothers and funding grand projects, you have no ability to make a success.
Instead, invest in a practical “clean tech” technology, you can afford. Buy yourself a dry cleaning outlet, using clean/green technology, instead of the older highly toxic process. Make a success of an enterprise like that, and people will start to respect your ability to run a larger project.
Les,
I’ve included this reply under a separate heading, because it’s a separate issue.
The reason people use nom-de-plumes on internet forums, is so they can enter debates, and freely express themselves on issues, on an equal basis. In my case, my personal views on environmental, economic and social issues, are not my client’s or even professional colleagues business.
In my case, the use of a nom-de-plume, allows me to speak freely, without betraying any professional confidence, or implicating others. (also I don’t become the target for malevolent fanatics).
It’s the same reason we have secret election ballots.
Les, you should concentrate on what other people are trying to communicate, not attempt to stifle debate because others don’t think the way you do.
Concentrate on positives, not negative bitterness. If you find yourself stymied on one project, move on, and support a project on a scale that you can bring into fruition.
It’s a great shame to let all that energy, and passion go to waste on negative, and futile bitterness.
Just a note on the Biltmore Hotel, it’s truly one of the world’s most opulent hotels. As a child, I stayed with my parents at the Biltmore. My father had accepted an offer to be an adviser to a Hollywood studio for a series of war films.
Sadly, the studio’s opinion of my fathers value didn’t run to a suite at the Biltmore, nor his addition to Hollywood Park racetrack ! Once again, we returned to the UK by borrowing the fare home. Ironically, just after we left, another studio tried contacting my father to offer him a screen test, unfortunately, he mistook the studio executive for one of his numerous creditors, and made his escape, little realizing he may have escaped his true vocation.
But my fondest memories of the Biltmore were the enormous meals. The UK was still very poor at the time, and rationing only ended that year. In contrast, the US seemed like a paradise of plenty, with the Biltmore evidence that heaven does exist ! 🙂 .
Anonymous words from those that refuse to identify themselves don’t deserve the time needed to read them.
Here, Les, (and I also saw your piece to Craig on the business of anonymity) the exchange so far is instructive and “mind-expanding.”
In the renewable vs “dirty” energy wilderness we’re all–regardless of our individual passions, or positions, or magnitude of concern about our “common mother” being on the verge of self-induced catastrophe–a wandering blind herd feeling our way about the proverbial elephant.
So your implication that a guy with an assumed name has no place round the discussion table is to me a little off the mark. What if the guy has the most plausible viewpoint? Or the most researched–according to details and depth of analysis?
Or the most logical . . . (It’s akin to believing that a literary masterpiece created by a “pen name” author is not, or cannot be, a masterpiece because of the pen name!)
Now I find it hard to “side” with lots of what marcopolo writes, but (Boy!) he seems to present views pertaining to what is “obtaining” in the noble corridors of economic and political power. And it is frightening indeed what is observed from this end of the valley. The terrible consequences of global warming is already upon us, although the high and mighty would have us believe otherwise. And so they continue to brand these effects (and their underlying causes) as pseudo-science and so forth.
My take on all this is already in the domain of common knowledge: the time has come for those in the valley to strengthen their weak knees and loins and stand to the battle cry for a complete paradigm shift in the current world energy infrastructure. Indeed the point, as often clearly expressed by marcopolo, of the hydrocarbon industry effectively bankrolling the “functionalities” that keep the mechanisms of current civilization going is one the disciples and gurus of greenness must contextualize and incorporate into their still-forming economic and political “lifeforms!”
The future is green!
Llord Aidoo,
Obviously, we are both environmentalist’s. This is true of the all the contributors to Craig’s forum. The difference between us, is that I have grown tired of inane rantings from extremists.
I’m also alarmed at the general public’s increasing disenchantment for the environment concerns.
I believe, and with good evidence, this disenchantment is not caused by any evil plot by shadowy billionaires, but due to the excessive, fanatical intolerance,unrealistic claims and demands of ” disciples and gurus of greenness “.
It’s my opinion, supported by a good deal of research, the general public has become weary of the “green’ message. Good will, and respect for the science has been eroded. The famous “silent majority” believe environmental causes have become a sort of pseudo-religion, with fanatical high priests, acolytes, advocates, and a leftist economic dogma.
That should be a cause for deep concern. Sadly, it’s not a concern to among the fanatic’s. These would be participants in a “holy war”, are now too busy fighting internecine conflicts, and persecuting “heretic’s”. They preach an Armageddon, which science no longer supports.
They have become, what they once despised.
This lack of tolerance, and flexibility of thinking, has lead to a series of spectacular failures, and a vast wastage of public money. One of the hallmarks of “green projects” is the lack of critical analysis by green advocates. The assumption that all alternate energy, and green technology, must be defended against the “evil’ criticism of the enemy, is reminiscent of the mentality that drove Communist revolutionary policy.
I also believe that all this rhetoric along with passionate calls to restructure society, has cost moderate environmentalists the opportunity to achieve real progress. The “call to arms” has achieved very little in the way of practical achievement. It’s just proved to be a distraction from real priorities, and polarized opinion.
Failure to admit errors, lack of scrutiny, lack of monitoring, covering up failures, paranoia and intolerance of criticism. Sadly, these have become the hallmarks of “green advocates”.
Believe me, there is nothing very noble in the corridors of economic and political power! 🙂
Elected politicians are mostly preoccupied with satisfying the demands of their electorate. Like consumers, voters are becoming increasingly fickle and hard to predict. This makes long term planning difficult.
“Green politicians “, thrive in nations with strong healthy economies. Their support base is largely middle class, educated, and work in government funded institutions, the IT sector, or students etc.
In the Western democracies, this class of society has been rapidly increasing. The older, traditional industries, have been largely abandoned or exported to developing countries.
With the rapid growth of the internet, the importance of civic responsibility, and local community participation has been eroded. The idea of living within a realistic economic model, with accountable governance, has fallen out of fashion. Conservatives, feel like adults at a teen party. Not only aren’t they having fun, but they realize they party goers are mocking them for worrying about who will clean up, and pay the catering bill.
So far the US has paid for the party on it’s American Express card. Once again the US has been blessed by good fortune in the form of a domestic energy bonanza. Thanks to the despised oil/gas industry, the US has avoided a harsh economic catastrophe.
The US can continue to waste this blessing, or harness all the talents, from every sector of it’s population to achieve responsible recapitalization and reform. The US can’t afford to waste money and public good will on impractical, disruptive ideologies. It’s time to form a practical list of priorities, and implement real environmental policies, that may lack excitement, but are economically responsible, and target achievable objectives.
One of the reasons that I admire Craig, is he’s actually trying to achieve environmental benefits, in a moderate, and practical way. I believe he’s flexible and accepts criticism. He understands that not all his aims are achievable, and tries to be inclusive, seeking to harness the best of what exists, to achieve a better future.
Hopefully, the future will be increasingly greener ! But, it’s an evolutionary process, not revolutionary !
Environmental advocates will need to adapt. It’s no longer acceptable to just rant ideology, wild claims and unsupported “science” to gain support. Like everything that was too easily accepted, buyers remorse has arrived ! Environmentalists, need to be very accurate, practical and credible. They need to readily admit errors and mistakes. It’s important that environmentalists gain a reputation for rigorous reveiw and self-criticism, in addition to a reputation for consultative and commonsense .
Passionate Idealists are always tempted like Stephan Leacock’s character, “to fling themselves upon a horse, and ride off madly in all directions” ! I believe that phase must be brought an end. It’s exciting, but ultimately counter-productive.
By concentrating on realistic projects, preferably with as little Taxpayer investment as possible, environmentalists can prove the value of responsible, beneficial, economically viable objectives. Each successful project will restore public confidence and support for environmental policies.
But, that’s just my opinion !:)
Are you hiding behind a false moniker too? If so what you might say is also worth next to zilch in my view. My position that a person with an assumed name has no place in the discussion is to you “a little off the mark” you say! Well at least you know who said it and you can take it anyway you like. For all I know you and marcopolo are one and the same person.
We could be, but we aren’t. Not only do he and I disagree on almost everything, but we have completely different writing styles. For example, I use commas much more sparingly.
Also, I fail to see any possible motivation for publishing content that’s so directly disagrees with virtually everything I stand for.
Craig,
I’m not sure that we really do “disagree on almost everything”. In fact our objectives are very similar. We differ mostly about the methods of achieving those objectives.
I seek only better environmental practices, and better technology. I believe that’s most likely to be achieved within the existing political economic structure. You are seeking a wider social agenda, in which society and the economy must be disrupted to achieve environmental reform.
I see that as impractical, and even counterproductive. I think that by introducing to many extraneous agendas, the focus required to achieve practical results, dissipates.
But somewhere in the middle, is where we agree ! 🙂
Actually, that’s 100% true.
Craig, my previous comment starting with “are you hiding” was in response to Llord Aidoo’s comments. But while I’ve got your attention; why do your form say “Please enter your name here” if just any old name will do?
Pardon the typo: I should have said why does your form say “Please enter your name here” if just any old name will do?
Les,
Everyone’s tried to be courteous and polite to you. Now you’re becoming like a guy in a bar who’s had one too many, and needs to go home before creating an incident he’ll regret the next day.
Venture Capital Is Again Embracing CleanTech
CLEANTECH HAS RAKED IN $2BN IN VENTURE CAPITAL AFTER TWO-YEAR SLIDE
According to NVCA, cleantech saw a 29% increase in venture capital invetments in 2014 from 2013.
Good news! Thanks.
The NVCA is a trade association, or lobby group for smaller, USA, non-bank VC funds.
Even so, $2 billion is a very small sum in comparison to the total trading of NVCA members.
Perusal of press releases by NVCA reveals no such information. Nor does any such article appear on the NVCA members blog. Interestingly, the NVCA archivist, can find no such reference.
The closest item that can be found, is a policy statement issued by the NVCA, to support Will Coleman’s Testimony before Congress on Clean Energy :-.
” America’s economic strength over the last century has been fueled in large part by access to affordable and abundant domestic energy resources. Investments in oil, hydro, nuclear and natural gas have unlocked innovations that have helped ensure America’s energy security. Energy, particularly the global transition to next generation forms of energy, remains one of the largest growth opportunities that exists today. This transition is critical to our ongoing competitiveness and venture capital plays a critical role in all of it through the funding and support of high-growth startups focused on unlocking new energy resources.
As a nation, we depend heavily on access to stable, low-cost energy sources to fuel economic growth and ensure national security. We are fortunate to have a strong, diverse natural resource base. However, much of our competitive advantage over the last two centuries has come from our ability to innovate—to develop new, lower-cost or advantaged technologies such as oil, nuclear, natural gas, and now renewables, ahead of our competitors. ”
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The NVCA also revealed :-
WASHINGTON, DC – Corporate venture groups invested $2.2 billion in 196 deals to U.S.-based companies in the first quarter of 2015, according to the MoneyTree Report™ from PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters. Corporate venture accounted 16.6% of total venture dollars invested and 19.0% of all venture deals for the quarter. Total dollar investment in the first quarter is up significantly compared to the fourth quarter of 2014 when corporate venture groups deployed $1.4 billion in 199 deals. Part of the dramatic increase can be attributed to a $900 million investment by Google Ventures in SpaceX.
“By all measures, the first quarter was a very active period for corporate venture groups, almost doubling the total amount of capital deployed to the startup ecosystem from the previous quarter,” said Bobby Franklin, President and CEO of NVCA. “While the one-time investment of $900 million to SpaceX by Google Ventures accounts for this spike in total dollars deployed, corporate venture groups still accounted for 19% of all venture capital deals for the quarter, an impressive showing that is likely to increase as more and more corporations launch corporate venture groups or reactivate dormant ones.”
Industry Analysis
In a shift from previous quarters, the Industrial/Energy sector received the highest level of funding of all industries in the first quarter with corporate venture groups deploying $963 million in 9 deals, representing 43.6% of total corporate venture capital dollars deployed. This jump to the top can be attributed to the investment by Google Ventures in SpaceX. Software companies received the second highest level of corporate venture dollars for the quarter with $681 million invested in 96 deals, representing 30.8% of total corporate venture capital dollars deployed. Biotechnology companies received the third largest total investment amount by corporate venture groups during the quarter, accounting for $249 million in 29 deals, representing 11.3% of total corporate venture capital dollars deployed.
Corporate venture investing in the life sciences sector, which includes biotechnology and medical devices, totaled $275 million in 28 deals. As a percentage of overall venture investing in life sciences companies during the first quarter, corporate venture represented 12.7% of all dollars invested and 19.6% of deals. ”
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But the definitive break up of VC investment appears in the NVCA report :-
“WASHINGTON, DC – Venture capitalists invested $13.4 billion in 1,020 deals in the first quarter of 2015, according to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters. Quarterly venture capital (VC) investment declined 10 percent in terms of dollars and 8 percent in the number of deals, compared to the fourth quarter when $14.9 billion was invested in 1,103 deals. The first quarter is the fifth consecutive quarter of more than $10 billion of venture capital invested in a single quarter.
“Although down slightly from the end of last year, the venture ecosystem deployed a healthy amount of financial capital to the startup ecosystem at the start of 2015, surpassing the $10 billion mark for the fifth consecutive quarter and setting the stage for what we expect to be another busy year for startup investing,” said Bobby Franklin, President and CEO of NVCA. “Last quarter, it was great to see healthy first-time funding levels and that the majority of deals were seed and early stage. Balancing the investment in megadeals, venture capital investors remain focused on building the next generation of companies.”
“Historically, VC investing in the first quarter of the year is typically slower than the rest of the year. So, the drop in dollars invested compared to Q4 is not necessarily indicative of what’s to come in 2015. In fact, the $13.4 billion invested in Q1 of this year is the highest first quarter total we’ve seen since 2000 and is also a 26 percent increase in dollars compared to Q1 of last year,” remarked Tom Ciccolella, US Venture Capital Leader at PwC. “We saw twelve deals over $100 million including two $1 billion investments in Q1, continuing the megadeal trend. One of the billion dollar investments was in the Later Stage of development which contributed, in part, to dollars invested in Later Stage companies doubling in Q1 compared to the prior quarter.”
Industry Analysis
The Software industry continued to receive the highest level of funding of all industries, despite being down for the quarter. Venture capitalists invested $5.6 billion during the first quarter of 2015, down 8 percent compared to the fourth quarter when total venture investment into the Software industry reached $6.0 billion. The Software industry also counted the most deals in Q1 at 434, down 6 percent compared to Q4.
The Biotechnology industry captured the second largest total during the quarter with $1.7 billion going into 124 deals, a 14 percent decline in dollars invested but a 14 percent increase in deals from the prior quarter. Overall, investments in Q1 in the Life Sciences sector (Biotechnology and Medical Devices combined) received $2.2 billion going into 193 deals, an 18 percent decline in dollars and 3 percent drop in deals when compared to Q4 2014.
The Industrial/Energy industry was the third largest industry for dollars invested with $1.4 billion going into 63 deals, up 133 percent in dollars invested and 5 percent in total number of deals. Part of the increase in dollars can be attributed to the second largest deal of the quarter falling in the Industrial/Energy category, a $1 billion investment.
Five of the 17 MoneyTree industries experienced increases in dollars invested in the first quarter, including Telecommunications (308 percent increase), Healthcare Services (141 percent increase), and Financial Services (80 percent increase).
Venture capitalists invested $3.1 billion into 231 Internet-specific companies during the first quarter of 2015. This investment level represents a 4 percent increase in dollars but a 2 percent drop in deals compared to the fourth quarter of 2014 when $3.0 billion went into 236 companies. “Internet-Specific” is a discrete classification assigned to a company with a business model that is fundamentally dependent on the Internet, regardless of the company’s primary industry category.
Stage of Development
Seed stage investment was down 32 percent in dollars and 35 percent in deals with $126 million invested into 26 deals in the first quarter, the lowest quarterly deal count since the MoneyTree began tracking VC investments in 1995. Early stage investment was down 34 percent in dollars and 14 percent in deals with $3.7 billion going into 492 deals. Seed/Early stage deals accounted for 51 percent of total deal volume in Q1, compared to 55 percent in the prior quarter. The average Seed stage deal in the first quarter was $4.8 million, up from $4.7 million in the fourth quarter of 2014. The average Early stage deal was $7.5 million in Q1, down from $9.8 million in the prior quarter.
Expansion stage investment was down 15 percent in terms of dollars in Q1 but flat in terms of the number of deals, with $5.4 billion going into 295 deals. Overall, Expansion stage deals accounted for 29 percent of venture deals in Q1, up slightly from 26 percent in the fourth quarter of 2014. The average Expansion stage deal was $18.3 million, down from $21.7 million in Q4 2014.
Investments in Later stage companies rose by 50 percent to $4.2 billion going into 207 deals in the first quarter, the largest quarterly total of dollars invested in Later stage companies since Q4 2000. Later stage deals accounted for 20 percent of total deal volume in Q1, up slightly from the prior quarter. The average Later stage deal in the first quarter was $20.3 million, up from $14.1 million in the prior quarter, attributable in part to four of the 10 largest deals in Q1 falling into the Later stage of development.
First-Time Financings
First-time financing (companies receiving venture capital for the first time) dollars decreased 30 percent to $1.8 billion in Q1 while the number of deals was down 18 percent from the prior quarter, dropping to 305. First-time financings accounted for 14 percent of all dollars and 30 percent of all deals in the first quarter.
Of the companies receiving venture capital funding for the first time in Q1, Software companies captured the largest share and accounted for 36 percent of the dollars and 46 percent of the deals with 139 companies capturing $657 million. First-time financings in the Life Sciences sector was up 7 percent in dollars from the prior quarter with $440 million going into 42 companies, compared with 33 such companies receiving $410 million in Q4. The average first-time deal in the first quarter was $6.0 million, down from $7.0 million in the prior quarter. Seed/Early stage companies received the bulk of first-time investments, capturing 78 percent of the dollars and 82 percent of the deals in the first quarter of 2015. ”
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I apologize for the length of this comment, but it would be unfair to edit these reports.
There is a lot of confusion as to what constitutes, ” Venture Capital ” ! For instance, both Tesla and Goldman Sachs’ just announced arranging a $750 million line of credit for Tesla Motors.
This new financing arrangement has been heralded by pro-Tesla media, as a ringing endorsement of the success of Tesla, and proof of future expansion.
More cynical media commentators would interpret this as a ploy by Goldman Sachs and Tesla to detract from the admission by Elon Musk that Tesla is dropping it’s ZEV credit compliance battery swapping scheme, preventing any drop in the share price
Even more confusing, is some media reports posted this a proof of another $ 1 billion dollar “investment” in “green” technology.
The same overly excitable media also interprets Tesla intention to build a battery factory in Nevada as a $10 billion investment with an additional $3 billion for the state of Nevada.
In fact, Tesla is only obliged to invest less than $ 3.5 billion, and over many years. The State of Nevada is spending very little, just granting tax credits over a long period.
But it’s the $13 billion figure, which is reported to the IEA, IMF, etc and included in their statistics, from which they compile the reports everyone loves to quote ! After a few years, this information becomes so widely referenced, that it becomes an unassailable “fact”.
The point was Venture Capital Is Again Embracing Cleantech, meaning the Cleantech space is on the upswing. This gives hope to those like myself who want to see things begin turning around for the world before it’s too late to stop runaway global warming and catastrophe.
Cool. Please see: http://2greenenergy.com/2015/06/17/venture-capital-angel-investment/.
Les,
Venture Capitalists will always embrace any viable technology. That’s the business ! Unlike conventional Banks, and Capital Funds, that’s all they do ! (especially ethical lenders)
But if you’re going to cite a source as evidence, it would be a good idea to quote a reference. Just typing in uppercase, isn’t sufficient. Without being able to reference your source, it looks like you just made it up!
I’m sure you don’t people to think that, so the best way to avoid giving that impression is to provide a reference link to your source,
Duly noted and then dismissed due to not having any clue as to who said it…
Les: You DO realize that there is no way to police the use of anonymity (even if I wanted to), right? I might not be Craig Shields; my real name could be Greg Fields or Peg Yields, and there would be no way for anyone to find out. (I happen to be Craig Shields, FWIT.)
Graig: you do realize you wouldn’t need to police the use of anonymity – let the bloggers use google or some other means to find out more about the people who put a real name down. I think all you do in allowing people to use make believe names is let people hide who the are and who they represent. And you do realize newspapers often require people to use their real names…
OK, but I’m not willing to pursue this. Thanks for your ideas; I appreciate your contributions.
Without wanting to encourage this pointless nonsense further, I would just observe that I would rather commenters used made-up identities, than made up facts and references !
Yep.
So would I, and thanks for adding to this pointless nonsense whoever you are…
And by the way who is using made-up facts and references? If anyone has seen any I would suggest they be pointed out for all of us who are not afraid to identify themselves.
“Humanity has pushed the world’s climate system to the brink, leaving itself only scant time to act. We are at about five minutes before midnight.”
— Rajendra Pachauri, Chair of the UN Intergovernmental Panel on Climate Change, 2013
If you’re like me, you are feeling a strong sense of responsibility to empower a big fix for the global warming issue before it is too late, a fix on the scale of the Marshal Plan that enabled the rebuilding of Europe after World War Two. Scientists now report that we only have a few years left to transform our society to a renewable energy (zero-carbon) economy if we are to avoid catastrophic climate change. So what should our role be in creating this all-important transformation? And who among us can deny this need?
– Les Blevins
Recovering and processing construction and demolition waste saves valuable landfill space and represents “huge opportunities,” said Brendan McKenzie, national sales manager, OSA Demolition Equipment.
C&D recycling is a $7.4 billion industry, Recycling Today reports. More than 480 million tons of C&D waste is generated in the US annually, making it the largest individual solid waste stream in the country.
AAEC’s fuels processing technology is well positioned to contribute to this lucrative field of endeavor as units can be made portable and transported on flat bed trailers said Les Blevins of Advanced Alternative Energy.
Here is another area AAEC’s products can contribute.
Biobased products contribute $369 billion to the US economy, according to a report released by the US Department of Agriculture.
The independent report, An Economic Impact Analysis of the U.S. Bioproducts Industry, says the industry is responsible for 4 million American jobs. Each job in the biobased products industry is responsible for generating 1.64 jobs in other sectors of the economy.
In 2013, 1.5 million jobs directly supported the biobased product industry, resulting in 1.1 million indirect jobs in related industries, and another 1.4 million induced jobs produced from the purchase of goods and services generated by the direct and indirect jobs.
Mandated by the 2014 Farm Bill, the report is managed by the USDA Biopreferred Program and builds on the Why Biobased? report released last year by the USDA.
Read more: http://www.environmentalleader.com/2015/06/18/biobased-products-contribute-369bn-to-us-economy/#ixzz3ddRIVxrz
marcopolo may wish to remain out of sight but when he throws dirt out from under the rug he’s hiding under I see that as an opportunity…
( Sigh ),
When caught out making stuff up, it’s best to just apologize and move on, not rant louder.
Shouting louder, and yelling insults, doesn’t make people listen, or agree. It fact it only makes people dislike, and distrust, the cause you are espousing.
No one is shouting nor yelling. I’m simply speaking with due restraint and pointing out the facts as I see them and citing those well versed experts that agree with my position.
Here’s another,
No new nuclear or coal plants may ever be needed in the United States, the chairman of the Federal Energy Regulatory Commission said today.
“We may not need any, ever,” Jon Wellinghoff told reporters at a U.S. Energy Association forum.
The FERC chairman’s comments go beyond those of other Obama administration officials, who have strongly endorsed greater efficiency and renewables deployment but also say nuclear and fossil energies will continue playing a major role.