Cleantech venture capitalists are pretty psyched at the prospect of securing stimulus money for their portfolio companies. But they’re also doubtful that the money will actually go to companies with superior technologies. Rather, they say, recipients are likely to be judged on who creates the most “green jobs,” with less regard for whether those positions will be sustainable over the long term.
That was one of the concerns raised at a panel in Palo Alto this week on “The Current State of the CleanTech Bubble,” in which a half-dozen venture types debated whether the past half year’s precipitous drop in cleantech venture funding should be taken as an ominous or positive sign. Panelists agreed on one thing – that while VCs may be spending less, the federal government will be spending a lot more in the sector. And that’s likely to create conflicts.
“We don’t want to make our investment decisions based on what some government bureaucrat thinks about increasing headcount,” says Robert Walker of Sierra Ventures, which he says prefers to invest in startups that will take tens of millions of dollars to grow to maturity rather than “hundreds of millions in project finance.”
Matt Garratt of Battery Ventures says to date the application process has a lot of emphasis on job creation, but “not so much on technology viability.” Moreover, while stimulus money is “overall positive,” he says, “the concern is if a lot of these companies get huge amounts of government money and ultimately fail, there could be a backlash.”
It looks like huge amounts of money are coming anyway. The American Recovery & Reinvestment Act of 2009 includes generous sums for all things green, including solar farms, wind turbines, electrical grid updates, and weatherizing buildings. Some industry watchers expect to see upwards of $200 billion going into the space over the next two to three years.
There’s also plenty of job creation promised. The Council of Economic Advisers last week released a report saying that “green” jobs, such as environmental engineers, technicians, and scientists, would grow by 52 percent between 2000 and 2016. Definitions vary as to what qualifies as a green job. One of the more recent estimates, from the Pew Charitable Tursts, determined that clean energy economy accounted for about 770,000 jobs in 2007.