We’ve written a lot about the cleantech funding void, for VC-backed companies with some sort of manufacturing component (e-vehicles, biofuels, etc). Many of these startups were founded on the assumption of available credit, but fell into a capital hole when the banks began blowing up.
This led to the creation of gap-filling “green growth” funds, from firms like Blackstone Group, C Change Capital, CMEA Capital and Kleiner Perkins. Actually, scratch CMEA Capital from that list.
San Francisco-based CMEA has canceled plans to raise the $500 million-targeted fund, as first reported this morning by VentureWire. I spoke with CMEA managing general partner Jim Watson, who said that the decision was driven by the recognition that CMEA’s core competency is in early-stage transformative science rather than in later-stage growth financing.
“You have to recognize as a fund what you’re good at, and match opportunities to that,” Watson said. “Most of the later-stage renewable energy deals are not economically feasible for us or our investors.”
He also added that the “green growth” segment is largely being supplanted by the government, and also that CMEA is considering government or corporate partners for even its early-stage investments. “We’re spending more and more or our time with utilities or billion dollar oil companies… It’s now part of our due diligence.”
Watson adds that the fund abandonment was not due to fund-raising difficulties, as the firm did not formally approach LPs about it.