More money than ever is flowing to CleanTech

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More money than ever is flowing to CleanTech

A decade and a half ago, “cleantech” was decidedly on the rise among venture capital (VC) investors. It became one of the hottest investment sectors among VCs practically overnight. From 2005 to 2007, cleantech venture capital deal volumes doubled, and dollars invested quadrupled[1]. Such funding has been essential to the growth of well-known cleantech firms, including Boston Power, Nest, Silver Spring Networks, and Solar City (now absorbed into Tesla) in the energy storage, smart grid, and solar industries.[2]

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And then, also very quickly, the sector fell out of favour. In fact, a close look at VC investments suggests that early-stage cleantech companies and entrepreneurs are facing increasing challenges in accessing investment[3]. According to data compiled by Cambridge Associates, venture capital dollars into the sector went from $19.0B in 2005-2009, to $10.9B in 2010-2013.[4]

However, by the last half of the decade, the resurgence in cleantech was keenly felt across much of the investment industry, especially through such channels as impact, sustainability, ESG (environmental, social and corporate governance) and socially responsible forms of investing. Much of the growth in such sectors is being driven by a significant international push towards achieving a clean global economy. With human, environmental and economic damage being more transparently observed as a direct result of climate-related changes, recent years have seen something approaching a critical mass of people applying pressure to fight global warming, not the least since the signing of the 2015 Paris Agreement, which commits almost every nation on the planet to limit their carbon emissions.[5]

Today, there is a steadily expanding “clean economy” in which an increasing number of companies are dedicated to achieving such objectives as resource sustainability, clean-energy transition from fossil fuels to zero-carbon energy production and storage, and water-scarcity solutions.

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Source

Cleantech for Europe, a new initiative created by Cleantech Group, supported by Breakthrough Energy, presented its first ‘EU Quarterly Cleantech Briefing’[6]. The analysis found that in the first half of this year, more than €7 billion of venture capital was invested in cleantech innovation in the European Union (EU). With a few months remaining in 2021, this figure has already beaten the previous annual record for Europe, set just last year at €4.7 billion. Clean innovation feeds a fast-growing global market for environmental solutions that will be worth $2.5 trillion by 2022, according to a 2018 report from a Canadian environment-economy research network and policy think tank, Smart Prosperity. Indeed, there is much about which to be hopeful. Solar is leading the renewables charge globally, ultra-low interest rates are helping to finance numerous clean-energy projects, and more governments and companies are adding their support to cleantech.[7]

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Looking forward, commercializing new, innovative clean technologies to grow the economy and slow climate change will require a more diverse set of actors and funding models that leverage new private and public funding sources to spur the next generation of breakout clean energy companies.[8]

 

 

 

 

 

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