Venture Capital and Cleantech: The wrong model for energy innovation

Benjamin E. Gaddy, Varun Sivaram, Timothy B. Jones and Libby Wayman

Energy Policy, 2017, vol. 102, issue C, 385-395

Abstract: Venture capital (VC) firms spent over $25billion funding clean energy technology (cleantech) start-ups from 2006 to 2011. Less than half of that capital was returned; as a result, funding has dried up in the cleantech sector. But as the International Energy Agency warns, without new energy technologies, the world cannot cost-effectively confront climate change. In this article, we present the most comprehensive account to date of the cleantech VC boom and bust. Our results aggregate hundreds of investments to calculate the risk and return profile of cleantech, and we compare the outcomes with those of medical and software technology investments. Cleantech posed high risks and yielded low returns to VCs. We conclude that among cleantech investments, “deep technology” investments—in companies developing new hardware, materials, chemistries, or manufacturing processes—consumed the most capital and yielded the lowest returns. We propose that broader support from policymakers, corporations, and investors is needed to underpin new innovation pathways for cleantech.

Keywords: Venture Capital; Energy; Cleantech (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:102:y:2017:i:c:p:385-395

DOI: 10.1016/j.enpol.2016.12.035

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