Cleantech Highlights

The illusion of knowing versus knowing that we don’t know ...
- Vinod Khosla

The quote above rings so true in today’s economy. In Cleantech, for example, who would have guessed 12 months ago that the hottest segment for IPOs would be biofuels? (See below) The industry is at an early crossroads at multiple levels with rapidly shifting dynamics and global implications. Plenty of challenges and uncertainty exist, but, all the while, the momentum of change and innovation marches on.

Cleantech Venture Investing
According to Cleantech Group (and other sources with different statistical methodologies), Q1 2011 was the second highest investing total ($2.65 billion) since tracking of Cleantech activity began. From our own observations, SVB has noted that more companies are maturing, gaining revenue traction, and creating true economic benefit. On the other end of the spectrum, there has been a steady slowing of early-stage activity. Some facts and figures behind this total (Source: Cleantech Group):

• Big dollars, but it was the lowest deal count (165) since early 2009
• Just 10 financings accounted for almost 50 percent of the total (Good news: five of the seven that fit SVB’s Cleantech definition are SVB clients)
• Ninety percent of the dollars went to mid and late stage companies
• Early stage investing is in a trough at a level last seen in the depths of the recession
• Solar and transportation were the biggest recipients with 24 percent and 12 percent respectively
• North America dominated with 86 percent of investment followed by Asia (7 percent) and Europe/Israel (6 percent)
• California continues to see the lion’s share (70 percent) of North American activity

Underlying this data, the stratification of the Cleantech venture community continues with a small group of large, patient investors appearing to gain more dominance. Conversely, many of the smaller diversified and pure play investors have backed away or are re-trenching. Those firms are tending to focus more and more on “Clean IT” (another way of saying capital efficient) and/or later-stage companies where a value investment opportunity is perceived.

SVB’s Cleantech business continues to grow. SVB is actively pursuing industry research and thought leadership initiatives to respond to disparate interest groups that are grappling with the unique blend of technology, financing, policy, and economic factors Cleantech presents.