Blogs have been abuzz for a while about a bubble forming over the cleantech sector — what with all the dollars flowing into the sector’s search for clean-and-green power, energy, transportation — and whether a dotcom-like burst is likely. But venture capitalists take a rather more nuanced view, although two out of three believe the sector is getting overvalued.
Cleantech will see the same “waves of enthusiasm” that other darling sectors for venture capitalism, like information technology, have seen, said John Denniston, partner at Kleiner Perkins, the storied Silicon Valley firm most recently in the news for bringing Al Gore on board to focus on its green investments. “It’s the nature of the venture industry and wouldn’t surprise me if we see the same waves in the greentech sector,” Denniston told Reuters at the agriculture and biofuels summit.
Rodrigo Prudencio, a partner at cleantech-focused VC Nth Power, said bubbles may be forming over solar energy and biofuels, areas where too many dollars are chasing too few deals. But it’s too early to tell whether there will be a “pandemic” across the diverse cleantech sector, he said.
Pandemic or not, it’s definitely something VCs were discussing at a venture summit last month. Mohr Davidow Ventures general partner Erik Straser said at the summit there will be “flameouts” in the cleantech sector this year. “And a lot of capital has gone into a lot of companies.”
Despite these niggling concerns, VCs are assured of cleantech’s long-term potential and this year, the industry is expected to put even more money into these startups. After all, the global market for clean technologies is expected to reach $1 trillion in 25 years, and VCs wouldn’t be VCs if they didn’t outlast the blips, blogs and flameouts.
(We updated this blog post to fix the spelling of Rodrigo Prudencio’s name. As you can see, it is not “Prundencio.”)
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2 comments so far
Comparing cleantech to the dotcom bubble is akin to comparing apples and oranges. The first comes in response to a very real user pain that is there to stay for many years to come, and will require a myriad of solutions. The second was more in the ‘nice to have’category. Cleantech is about financing a complete overhaul of the economy and our way of life. Of course it will have its share of losers and winners like any sector. But overall one should expect it to grow exponentially.
http://lamarguerite.wordpress.com
- Posted by marguerite manteau-rao‘It’s All About Green Psychology’
Actually, both “bubbles” are indeed comparable, from the VC’s viewpoint: they were both based on then-current trends, and on complex technology projections and speculation, at the time. VC’s are not social engineers - they are essentially gamblers, betting on what seems to be the Next Big Thing. Fifteen years ago, it was that nearly all business would soon be conducted via the internet. Recently, it has been perceived to be a demand for anything that promises to ’save the Earth’ in the consumer’s mind. In both cases there were massive multimedia publicity campaigns driving demand for VC investment.
- Posted by Cristi