Green Options

Clean tech has passed biotech and IT as the top venture capital (VC) investment category in the world. This is after investments in leading clean tech markets increased by 10% in the third quarter of this year.

Cleantech Group released findings on Wednesday showing that the cleantech sector “accumulated $1.59 billion across 134 companies” and this was 10% more than the $1.2 billion it had accumulated in the second quarter.

While cleantech investment appears to be on the rebound, it’s clear the recession isn’t over yet. Mark Jensen, managing partner for the venture capital services group at Deloitte & Touche, said Wednesday that about half of the largest venture-capital firms expect to reduce their overall investments in the next few years in response to the recession.

But venture-capital firms expect cleantech to fare better than most other categories. According to the Deloitte survey, a whopping 95 percent said they plan to either increase or maintain their level of cleantech investment, with 63 percent anticipating more investment and 32 percent expecting to invest the same amount as they do now.

Solar venture investments hit a three-year low in the second quarter, the Cleantech Group said Wednesday. According to Brian Fan, senior director of research for the group, solar startups in North America, Europe, China and India raised a total of only $113.8 million for the quarter, which is down 7 percent from $365.7 million in the first quarter and down 86 percent from $834.7 million in the year-ago quarter.

As stimulus funding leads some industry insiders to think of Washington as “the new Wall Street” for green energy, some investment experts say they’re concerned about the government’s new role. “I worry about the government as a dealmaker in this space,” said Tom Bratkovitch, director of LP Capital Advisors, a consulting firm for private-equity investors, at a Thomson Reuters conference in Palo Alto, Calif., this week. “I just don’t know if the government is the best one to make decisions in this space.”

After all, the federal government has supported some technologies that have not panned out, while missing some that have ultimately been successful. The government also has a reputation for moving slowly – though the Department of Energy certainly is trying hard to get stimulus money out as quickly as possible – and the applications for the grants and loan guarantees can be extremely time-consuming.

At a cleantech panel about business opportunities running up to the 2012 Olympics in London, Dallas Kachan, managing director for the Cleantech Group, said that the second quarter “looks a lot like the first quarter” for cleantech investing so far.

In other words, it’s still down from last year, but deals are still happening and money is still available, he said. “The amount of investment is not continuing to plummet; it’s stable,” Kachan said. “Some might say we’ve reached bottom.”

It may be a bad time to seek funding, but some cleantech investors see it as a good time to get a deal. At the Clean-Tech Investor Summit in Indian Wells, Calif., last week, Kevin Walsh, managing director of renewable energy for GE Energy Financial Services, said GE is taking advantage of the economic environment to snag good deals and is also looking at smart-grid and energy-efficiency opportunities. “We’re being opportunistic,” he said. “You’ll see more deals on the venture side in the next few months.”

I’m a fan of The Funded, an online community of entrepreneurs to research, rate, and review funding sources worldwide. It’s a great example of a venture that promotes transparency and allows entrepreneurs to help each write business plans, share ideas and ultimately obtain funding.

A recent post discussed what the entrepreneur seeking funding should bring to an investor meeting. Answer: a deck that will take no more than 20-30 minutes to get through and cover the following points:

The ten slides that you need, in my experience, are:

1. Vision: What are you trying to do, and why are you doing it?

2. Market: What is the market you are addressing and the estimated value of this market over the next 5 to 10 years?

3. Team: Who are the key three to five executives (Vision, Operations, Tech, Sales, Marketing), and what are their specific qualifications in the target market?

4. Offering: What is your exact offering? If possible, present a three to five minute pre-recorded video demonstration.

5. Roadmap: Where are you in your offering release cycle and with respect to gaining traction?

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