Monday, November 19, 2012

Cleantech VC Investing Paradox

Cleantech VC Investing Paradox

It seems to me that the tier 1 VC investing in Cleantech is caught in the middle. Let's assume that the VC wants to invest $10 Million through the various rounds. On one end of the spectrum are the "home run" major impact clean energy companies. These companies are going to require $100's of millions in capital to reach profitability. For the Tier 1 VC this would imply they would need to invest ~$5 M in the company at an earlier stage of development than they traditionally invest in.

On the other end of the spectrum are the many companies/technologies that have an interesting product that works as planned, but will never be widely deployed. These companies can reach the market deployment stage, maybe profitability or perhaps be acquired with less the $2 million in invested capital. Likely an angel, sophistical angel investment or government grant company.

Thus, the Tier 1 VC is troubled to find a cleantech investment that meets their criteria.


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