New Report Finds Clean Energy Investment Trends Are Improving Investment Returns
November 13, 2017 /3BL Media/ - As investors converge in Bonn, Germany this week for the 23rd session of the Conference of the Parties, or COP23, to showcase how they are taking action to reduce the nation’s carbon footprint, a new report released today by the sustainability nonprofit organization Ceres and the Clean Energy Venture Fund (CEVF) finds that the accelerating trends in the clean energy technology investment market over the last seven years are expected to improve investment returns into the foreseeable future.
The report, titled “Clean Tech 3.0: Venture Capital Investing in Early-Stage Clean Energy – A Changing (Investment) Climate,” explores this evolving landscape, what went wrong in previous investment cycles, and the new, robust ecosystem that has emerged today to support such clean technology investments.
It highlights the many factors that have led to this re-emergence of opportunities for venture capital investment in early-stage clean energy investing. They include:
- increased global demand for clean energy solutions;
- clean technologies that are more mature and more primed for commercial deployment;
- a greater number of strategic financier, acquirers, and public-private partnerships;
- and a robust ecosystem supporting the commercialization of technology.
“Having invested in this sector for more than a decade, we have witnessed dramatic change, especially during the last five years,” said Daniel Goldman, a founding partner of CEVF, and early-stage clean energy investor. “Promising technologies are able to bring their product to market faster and with less capital. Many Fortune 500 companies are devoting considerable time and money to support the clean energy ecosystem and view it as a strategically important and financially attractive opportunity. And, the pace of deployment at the business to business and business to consumer levels is accelerating.”
The report notes that the changing landscape is also due to the fact that the number of energy-specific accelerators across the U.S. has increased from five to 19 since 2010, many of which are providing entrepreneurs with the needed tools to develop technology faster and less expensively. In addition, many incumbent players from diverse industries – such as BMW, Google, Engie and Emerson Electric – have stepped up to acquire promising technology companies and to provide liquidity for early-stage investors.
Notably, this report also highlights 2016 clean energy investment data from Bloomberg New Energy Finance that shows a 19 percent increase in 2016 in venture capital and private equity investment into clean energy firms, despite an overall 18 percent dip in clean energy investment worldwide.
Venture capital investment has historically proven challenging for investors focused on clean energy technology. Venture capital firms and corporate investors deployed more than $25 billion in funding for clean energy technology start-ups during 2006-2011, resulting in a loss of more than half of capital deployed, a performance track record that was significantly worse than overall venture investing.
Since those early days and lessons learned, however, the clean energy technology landscape has matured and changed considerably. The long-term global transition to a low-carbon economy – along with growing demand for clean energy – has led to more competitive and diversified investment choices and presents more attractive, lower risk opportunities for investors.
“Given the improving investment climate for venture capital investment in early stage clean technology, this asset class merits attention by institutional investors and their advisors,” said Chris Davis, senior director of the Ceres Investor Network on Climate Risk and Sustainability, a network made up of more than 130 North American investors, collectively managing more than $17 trillion in assets. “Early-stage venture capital investment is becoming more attractive to institutional investors and their advisors as opportunities in the clean technology sector expand.”
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. The Ceres Investor Network on Climate Risk and Sustainability comprises more than 130 institutional investors, collectively managing more than $17 trillion in assets, advancing leading investment practices, corporate engagement strategies and policy solutions to build an equitable, sustainable global economy and planet. For more information, visit www.ceres.org.
About Clean Energy Venture Fund:
Clean Energy Venture Fund (CEVF) is an early stage venture capital fund investing in companies commercializing disruptive clean energy technologies and business model innovations that are able to achieve significant scale by taking advantage of market-driven forces to address global climate disruption. The principals believe that the emergence of these technological innovations and compelling market drivers will result in widespread commercial adoption of the clean energy technologies. CEVF grew out of Clean Energy Venture Group (CEVG), an early stage investment cohort founded in 2005. According to Pitch Book (Oct, 2017), CEVG is among the top four most active clean energy investors in the country. More information is available at [www.cevf.com]