“cleantechinvestment: global patterns, performance and ...€¦ · . cleantech examples....

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Date:

Presented By:

“Cleantech Investment: Global Patterns, Performance and Prospects

Financing Eco-Innovation, Poznan

21 November 2006

Nicholas Parker, ChairmanCleantech Capital Group LLC


Cleantech Venture Network Advisory Board MembersCleantech Venture Network Advisory Board Members


The Cleantech MegatrendThe Cleantech Megatrend

• Cleantech encompasses knowledge-based technologies, products and services which:

- Optimize use of natural resources,

- While reducing ecological impact and

- Adding economic value by significantly lowering cost and improving profitability

Potentially Ubiquitous

Global Applications

Potentially Ubiquitous

Global Applications

Large & Growing, Profitable

Market

Large & Growing, Profitable

Market

• Cleantech now 3rd largest venture investment category, with over 13% market share in North America, 18% in Europe

• Similar to biotech as investment theme; investment returns on par with other categories

• Solar, wind, industrial water purification, desalination and bio-pesticide markets, among others, already multi-billion dollar markets experiencing double-digit growth

Enormous Multi-decade

Growth Potential

Enormous Multi-decade

Growth Potential

• May be biggest job & wealth creation opportunity of 21st century

• Enabling technology of industrial and post-industrial society

• Next and necessary wave of technological innovation


Cleantech ExamplesCleantech Examples

Agriculture - bio-based materials, farm efficiency technologies, micro-irrigation systems and natural pesticides

Energy - distributed and renewable energy generation and conversion (including fuel cells, geothermal, wind and photovoltaics); energy management systems; superconducting transmission; energy storageand power quality; key enabling technologies; and related Internet and information technology-based services

Manufacturing - advanced packaging; high value materials recovery; natural chemistry; sensors; smart construction materials; and precision manufacturing instruments.

Transportation - hybrid vehicles, lighter materials, smart logistics software and telecommuting

Water - water recycling and ultra-filtration systems (UV and membrane based systems), sensors and automation systems and desalination equipment


Cleantech is not EnvirotechCleantech is not Envirotech

Cleantechmid 1990s -

• Economic market drivers• Productivity-based purchasing• “Front-of-pipe” tech, e.g. zero

emission plants• Biological & materials science• Systems design & engineering• Rapid growth markets, e.g.

solar energy• “Entrepreneurial” mentality• High use of IT

Envirotech1970s-80s

• Regulatory driven market• Compliance-based purchasing• “End-of-pipe” tech, e.g.

scrubbers on smoke stacks• Chemical science• Traditional engineering• Slow growth markets, e.g.

waste management• “Save the world” mentality• Low IT use

Cleantech is emerging as the enabling technology of modern industrial society; the next and necessary wave of venture innovation in a natural

resource constrained world.


Technology ConvergenceTechnology Convergence

Clean Energy

Clean WaterCleaner Production

Advanced Materials & Nanotechnology (e.g. catalysts and membranes)

Information Technology & Internet (e.g. advanced meters and sensors)

CONVERGENCE CONVERGENCE

Biotech “CleanBio” (e.g. biopolymers and biofuels)


NA Cleantech Venture Investing1999- Q2 2006NA Cleantech Venture Investing1999- Q2 2006

US and Canadian Cleantech Venture Deals by Year, 1999- Q2 2006

121134

108

222205

246

128

191

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1999 2000 2001 2002 2003 2004 2005 Q1 & Q22006

$US

m

0

50

100

150

200

250

300

Num

ber

of d

eals

Total Cleantech Venture Investing 1999- Q2 2006: $9.7bn


NA Investment by SegmentNA Investment by Segment

Cleantech segments: by amount invested 1999 - Q2 2006

Energy48%

Environmental IT4%

Air Quality2%

Transportation & Logistics4%

Water Purification & Management

4%

Agriculture & Nutrition5%

Enabling Technologies5%

Materials Recovery & Recycling

5%

Manufacturing/ Industrial9%

Materials & Nanotechnology

14%

Energy-related deals are leading: 48% of total cleantech by amount.


North American Cleantech Investments, 1999- Q2 2006North American Cleantech Investments, 1999- Q2 2006

Cleantech is growing as an investment category: Now receiving 12+% of all VC in North America

U.S. and Canadian Cleantech Venture Deals by Quarter and as a percentage of total VC (by amount), 1999-Q2 2006

12%

9%9%

7%

4%

6%

5%4%

4%5%

4%5%5%

6%6%

2%2%2%

1%1%1%2%

3%

2%1%1%

3%

5% 6%5%

0

100

200

300

400

500

600

700

800

900

1999

Q1

1999

Q2

1999

Q3

1999

Q4

2000

Q1

2000

Q2

2000

Q3

2000

Q4

2001

Q1

2001

Q2

2001

Q3

2001

Q4

2002

Q1

2002

Q2

2002

Q3

2002

Q4

2003

Q1

2003

Q2

2003

Q3

2003

Q4

2004

Q1

2004

Q2

2004

Q3

2004

Q4

2005

Q1

2005

Q2

2005

Q3

2005

Q4

2006

Q1

2006

Q2

$ US m

0%

2%

4%

6%

8%

10%

12%

14%


European Cleantech Venture Investing2003- Q2 2006European Cleantech Venture Investing2003- Q2 2006

European Cleantech Investments: 2003 - Q2 2006

521.22 566.69 853.84 374.68

106

128139

53

$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

2003 2004 2005 2006USDm 0

20

40

60

80

100

120

140

160

Amo unt Euro pean CT VC Number o f Deals

Total Cleantech Venture Investing Q1 2003 – Q2 2006: $2.316bn


European Cleantech Investment by SegmentEuropean Cleantech Investment by Segment

2003-Q2 2006: Cleantech Venture Amounts Invested by Segment

Manufacturing/ Industrial 4.9%

Environmental IT 1.8%

Materials and Nano-technology 5.3%

Enabling Technologies 0.6%

Air Quality 0.8%

Agriculture & Nutrition 3.4%

Transportation & Logistics 0.6%

Water 7.4%

Materials Recovery & Recycling 5.1%

Energy 70.2%

Energy-related deals are dominating with 70.2% of total cleantech by amount.


European Cleantech Investments & as a Total of European VCEuropean Cleantech Investments & as a Total of European VC

2003-Q2 2006 European Cleantech Venture Investment/ Percentage of Overall VC

6%

10%

7%8%

5%

9%10%

9%

17%

12%

13%12%

8%

19%

0

50

100

150

200

250

300

2003 Q1

2003 Q2

2003 Q3

2003 Q4

2004 Q1

2004 Q2

2004 Q3

2004 Q4

2005 Q1

2005 Q2

2005 Q3

2005 Q4

2006 Q1

2006 Q2

$US m

0%

5%

10%

15%

20%

25%Amount Invested in $US m % Cleantech to Total VC Invested by Amount

Cleantech attracts an average of 10% of all VC in Europe, with a high of 19% in Q2 2006


Comparative AnalysisComparative Analysis

In general:

• More deals than anticipated in Europe, although 50% of NA

• Healthy pipeline of seed and early stage deals (supported by gov’t funds)

• Shortage of LP interest in specialist cleantech GPs

Compared to North America, in Europe there is

• Greater dominance of energy deals; especially energy generation technologies such as wind, solar and fuel cells.

• More emphasis on Materials/Recovery & Recycling than Advanced Materials & Nanotech, reflecting public policy

• Many more MBOs and LBOs, reflecting PE markets, culture and restructuring

• More robust public markets, especially fuelled by AIM listings + Frankfurt/Oslo

•Some industry consolidation occurring in renewables – as seen in cleantech to cleantech M&A activity.


Can Cleantech Make Money?Can Cleantech Make Money?

Cleantech Venture Investment – Patterns & PerformanceThe most comprehensive investigations of cleantech investment

performance to date

• Report released in late March 2005• 67 initial public offerings: 730 M&A transactions in 30+ countries• Estimates Cleantech IPOs yielded returns to pre-IPO investors

of 5.5x, while European venture-backed IPO generated returns of over 8x.

• Estimates overall returns on cleantech M&A transactions were 4.3x on invested equity, based on more than $94 billion in transactions tracked over the past 2 decades

• A hypothetical portfolio of cleantech venture investments delivered an estimated IRR of approximately 30%. (Assumed 40% of the portfolio’s investments were written off and an average holding period of five years.)


Top Exchanges for Cleantech IPOsTop Exchanges for Cleantech IPOs


Some ChallengesSome Challenges

Globally:• Building big-small business partnerships

• Building linkages between different capital suppliers (egproject finance, venture capital and equipment leasing)

• Encouraging appropriate public policies (in the US)

• Bringing cleantech to emerging market economies – BOP + BRICs

• Turning public R, D & D into commercial business

• Institutional support for venture capital

• From “clean energy” to “cleantech”


Thank You!Thank You!

Join the Cleantech Venture Network, attend the Cleantech Forums, access our leading edge research, including bi-weekly and quarterly industry reports, explore the Cleantech ETF and

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