(This complements a special report on green funding:
By Larry Aragon and Peter Henderson
SAN FRANCISCO Jan 28 Fears the United States
will lose a battle with China to create clean technology for a
climate-changing world don't fly with Silicon Valley venture
The California financiers have an impressive track record,
having funded small companies that eventually turned into
Google, Yahoo and scores of other giants that shaped the
internet revolution. After a sharp dropoff in the wake of the
financial crisis, VCs expect to be more active this year and
anticipate a much stronger flow of clean tech acquisitions or
Perhaps not surprisingly, most also believe the United
States remains overwhelmingly the best place to launch a clean
tech business and market new goods and services -- and they are
putting their money where their mouth is.
Those are some of the takeaways of a recent survey of 41
clean tech investors by Thomson Reuters. (For a graphic of the
Extrapolating from the survey responses of the venture
capitalists, most of them in the United States, they plan to
make up to 140 new investments in cleantech companies this year.
That would be a significant increase from last year, when
the U.S. venture industry as a whole made 117 new clean tech
investments, according to a venture capital database maintained
by Thomson Reuters.
Pointing to the power of U.S. innovation and know-how, the
respondents are optimistic the startups they finance will lead
the way in creating technologies that reduce global warming even
if material reductions in carbon dioxide emissions take time.
"It is likely that we will make significant technology,
conservation and policy gains globally ... but material CO2
reductions will take an additional decade to register," Don
Wood, a managing director at Draper Fisher Jurvetson, wrote in
one survey response.
Robert Nelsen, co-founder and managing director of Arch
Venture Partners, noted that "the world has absolutely no hope
of making any substantial impact on global warming without major
scientific breakthroughs, almost all which will come from United
"China and Europe are doing well developing markets and
applications, but we [the United States] still own the
More than three-fourths of survey respondents said the
United States would be the best market for cleantech over the
next five years, and 88 percent said America was the best place
to base a cleantech business in the next five years.
China ranked as the second best market (with 16 percent of
the total) and the second best place to locate a cleantech
business (with about 13 percent).
The survey respondents clearly recognize the critical role
that other countries will play if widespread adoption of clean
technologies is to be successful.
Countries such as China, India and Brazil will adopt such
technologies not just to combat climate change, but also because
of the sheer energy demand their economies are generating, wrote
Bilal Zuberi, a principal with General Catalyst Partners.
"Pressure from these countries will force the developed
world to also adopt renewables and energy-efficient technologies
at a faster pace," Zuberi noted.
One caveat: over the next decade, the progress will come
from companies that have already moved beyond venture capital,
with public share sales or by being bought out.
"VC-backed companies will definitely play a part, but
considering it takes five years for one to mature, it is the
companies that exist today that will have the biggest impact by
2020," wrote Todd Jaquez-Fissori, a managing director at
Hercules Growth Capital.
MORE CLEANTECH IPOS
U.S. venture capitalists expect to see a substantial
increase in the number of their portfolio companies that are
acquired or go public this year. More than 51 percent of the
respondents said they expected one to two of their companies to
be acquired or go public this year -- which translates to
anywhere from 21 to 42 companies.
That would be a significant increase from last year, when
only one VC-backed cleantech company, lithium-ion battery maker
A123 Systems AONE.O, went public on a U.S. exchange and just
seven VC-backed cleantech companies were acquired, according to
Three VC-backed cleantech companies have already registered
to go public this year:
* Codexis, which is working with Royal Dutch Shell on
biofuel products, has registered for a $100 million IPO. Codexis
has raised more than $125 million in VC from Bio*One Capital,
Chevron Technology Ventures, CMEA, and the Malaysian Technology
Development Corp., among others, according to Thomson Reuters.
* JinkoSolar Holding Co. Ltd., a China-based solar
company, has filed for a $100 million IPO on the New York Stock
Exchange. It previously raised $35 million in venture funding
from CIVC Partners, Shenzhen Capital Group Co. and Pitango
Venture Capital, according to Thomson Reuters.
* And Solyndra Inc., which builds thin-film solar tubes,
filed for a $300 million IPO. It has raised more than $500
million in venture capital from Argonaut Private Equity, CMEA
Capital, Redpoint Ventures, Rockport Capital Partners and U.S.
The primary focus of cleantech investors is now energy
Some 65 percent of respondents surveyed said their top
cleantech area for 2010 would be energy conservation-related
companies, such as makers of LED lighting, energy-efficient
building materials, or software that tracks and manages energy
used in home and electric vehicles.
Asked for specific areas of investment, fewer than 18
percent said they would target companies focused on "clean"
energy production, such as wind, solar, wave power and biofuels,
to replace energy produced by coal and oil.
Some 31 percent focused on energy management and 31 percent
more on energy storage, such as battery makers.
(Additional reporting by Clare Baldwin; Editing by Sara Ledwith
and Jim Impoco)
For other news from Davos, click on: [DAVOS]
For a multimedia version, click on: www.reuters.com/davos
For Reuters Insider, click on etv.thomsonreuters.com
Dealing 3000 clients can talk to Reuters journalists at
Davos via The Dealing Room, a Reuters Messaging chatroom, click
here to join: rmchat://room/thomsonreuters.com/The_Dealing_Room
For Reuters Breakingviews columns, click on: [ID:nTOPCOM]
For an interactive factbox on Davos, click on: