Cleantech

Cleantech Investing

The clean tech sector crosses traditional industry boundaries, including the transportation, geothermal, agricultural and waste management industries.

The clean tech sector crosses traditional industry boundaries, including the transportation, geothermal, agricultural, waste management, and energy industries.
However, despite its incredibly breadth and far reach, the clean tech industry has been struggling in 2015. Here, we examine how the market is doing, and where opportunities for investing might be found.

Market summary

The PriceWaterhouseCoopers Cleantech MoneyTree Report: Q1 2015 reports that cIeantech saw a 72% decline in funding from Q1 in 2014, to $129.2 million this quarter. This is part of a continued downward trend, from an excess of $800 million in the first quarter of 2012, to around $400 million in 2013, with a slight decrease in 2014.
Deal volume also decreased this quarter to 26. Brian Carey, Clean tech Advisory Leader, explains that “US clean tech venture investments are off to a slow start this year. While deal volume was certainly down, it’s the smaller average deal size that really impacted the overall investment level.” The average deal size was $5 million this quarter, representing a 63% year over year decrease.

Early vs. late term investments

This quarter, early-stage investment increased by 11% to $21.2 million. However, the average deal size shrunk to $2.4 million, representing a 39% drop. As for late-stage investments, there was a 75% year over year decrease to $108.1 million. With 17 deals this quarter, there was a 58% in deal size to $6.4 billion.
To summarize, there was a 31% decrease in quarter over quarter deal volume for early stage investment, and a 26% decrease for late stage investment. However, the decrease in late-stage investment had a greater impact on the sector, with a -70% quarter over quarter change in average deal size, and -78% change in investments since the last quarter. As late-term investment drives investment in the clean tech sector, these decreases were felt accutely.

Numbers by clean tech subsector

The clean tech sector had an almost universally disappointing quarter. Smart Grid and Energy Storage was the biggest market, raking in $59.1 million. However, this was a 66% decrease from the prior year. Nonetheless, other industries pulled back even more substantially. There was zero clean tech funding in the transportation and wind and geothermal sectors.
Water and waste management, agriculture and bioproducts and energy efficiency didn’t fare much better, with each of these three sectors experiencing a decrease of 90% or greater. Respectively, they only invested $3.6 million, $13.2 million, and $1.1 million in clean tech this quarter.

So where is there potential for clean tech investing?

The category defined by PriceWaterhouseCoopers as “Other Cleantech” grew by 48%. This increase is made even more impressive by the abysmal decreases for clean tech in other sectors. Other Cleantech investment reached $22.7 million this quarter, making it the third largest source of clean tech funding, after Smart Grid and Energy Storage, and Solar Energy (with $29.6 million). This suggests that there may be investment opportunities to be had in the clean tech sector. However, you have to look beyond the major industries to find real potential
 

Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.

MARKETS

Markets
TSX19222.74-35.58
TSXV644.91-7.45
DOW30946.99-491.27
S&P 5003821.55-78.56
NASD11181.54-343.01
ASX6706.00+177.60

COMMODITIES

Commodities
Gold1819.80-3.63
Silver20.91-0.24
Copper3.76-0.01
Palladium1875.00+7.00
Platinum915.00+8.00
Oil111.84+2.27
Heating Oil4.10-0.02
Natural Gas6.51+0.01

DOWNLOAD FREE REPORTS

×