Jump to Navigation

David Victor on Fresh Challenges for Energy Innovation

Venture Capitalists Back Away from Clean Energy

08/11/2011
Kevin Bullis, MIT Technology Review

As governments around the world are scaling back support for renewable energy, venture capitalists are shifting their clean technology investment strategy. They're focusing less on high-risk technologies and more on ideas that could have a faster payoff but a smaller impact, such as technologies for improving energy efficiency. The shift is raising concerns about how innovative energy technologies will  be commercialized.

Venture capitalists have traditionally focused on companies with low capital requirements that can quickly get bought up or go public. Many Internet startups fall into this category. But in recent years, many venture capitalists have been enticed to risk longer-term, high-capital energy investments in clean energy, thanks to generous government subsidies in renewable energy markets. In particular, they spent hundreds of millions of dollars on solar-cell startups that need to build expensive equipment and factories to prove their technologies, and can take many years to generate a return on investment.

Now many venture-capital firms are going back to their roots. Dozens recently stopped making initial investments in clean technology companies, according to Dow Jones Venture Source. Many that continue to invest in clean technology are shifting to areas such as energy efficiency, which includes low-capital projects such as software for monitoring and reducing energy consumption, according to an analysis by the Cleantech Group.

Click here to read the full article.

Related Links

David Victor is Director of the Laboratory on International Law and Regulation (ILAR). Looking across a wide array of issues from environment and energy to human rights, trade and security, the Laboratory explores when (and why) international laws actually work.

Related Stories

Back to Top