It’s easy to become discouraged about cleantech when headlines focus on one company after another that fails to make it work. Frequently the issue is not technology, but rather management, the supply chain, or the business model. Cleantech companies often have the added burden of creating value where there was none before. Being visionary is riskier than being mundane. Frankly, it’s surprising that more cleantech companies don’t fail.
Thankfully, there are still investors that are willing to bet on visionary and innovative solutions, particularly in energy. Two well-known venture capital funds have been active in this space recently. Braemar Energy Ventures announced that it closed its third fund, Braemar Energy Ventures III, LP, at the maximum amount of $300 million on June 19, 2012. Blue-chip Silicon Valley VC firm Khosla Ventures, meanwhile, said it’s raising a fund called Khosla Ventures Seed B. The firm’s first seed fund raised $300 million and closed in 2010.
These are on top of Goldman Sachs’ May announcement that it will create a $40 billion fund for cleantech investments.
What’s promising about these announcements is that, while the Braemar fund is focused on relatively mature, venture and expansion-stage energy technology companies, the Khosla Seed B fund will be focused on what the company terms “a crazy idea that may have a significantly non-zero chance of working.” Not exactly a vote of confidence, but the purpose of the Seed B fund is to target very speculative technologies, aiming to hit it big.
Why are venture capitalists still funding cleantech? Because the big picture, global challenges and opportunities have not changed. There are too many people and too few resources. It’s time we shared our prosperity with the 1.3 billion people living in extreme poverty. (Current data is difficult to come by; this figure refers to 2008 World Bank data for people living on less than $1.25 per day.) Energy is the engine of growth. For most of the developed world, cyber security has surpassed physical security as a primary concern. Venture capitalists understand these challenges. The purpose of Braemar Energy Ventures III is to “help deliver cleaner, cheaper, more efficient and reliable energy solutions.” Khosla Ventures is focused on several cleantech sectors, including alternative energy, energy efficiency, energy storage, and advanced materials.
Are there solutions that could address these big picture challenges in other ways? Certainly. They just won’t be getting funding from Braemar III or KV Seed B or Goldman Sachs. Being visionary still pays.
Article by Anissa Dehamna, appearing courtesy the Matter Network.