Companies such as BrightSource Energy, Genomatica, Elevance Renewable Sciences and Enerkem have withdrawn IPOs, and while SolarCity looks ready to go out in December, it won’t claim as large a market cap as expected not long ago.
In October, A123 Systems declared bankruptcy, a blow for remaining investors.
It is not an easy time to be a cleantech venture capitalist. Still a hardened group of investors presses on. A handful of these determined GPs gathered on stage at the GoingGreen Silicon Valley conference in San Francisco this week to talk about what keeps them going.
Here are some observations from the trenches:
Tucker Twitmyer: One motivation is better pricing. Building a syndicate is a bigger chore, but it is a good time to price deals aggressively, says Twitmyer, managing director at EnerTech Capital. “And we are doing that.” These days, if an entrepreneur gets a term sheet, the best advice is to “take it,” says Twitmyer.
Stephan Dolezalek: Perseverance comes from knowing the endgame. The business has come through the hype cycle and is deep in the trough. The question is “how to survive” to be in the position to win when things get better, says Dolezalek, managing director at VantagePoint Capital Partners. Venture has previous scars from battles over Ethernet networking and disk drive production.
Nat Goldhaber says he is watching the SolarCity IPO closely. If the company goes out in its range of $13 to $15, it will be a pretty good result for investors, says Goldhaber, managing director at Claremont Creek Ventures. It would have a market cap of more than $1 billion. The company’s business is an example of a niche where profits can be made, says Goldhaber. In cleantech, “I think there are opportunities to make money.”
Another upbeat sign is the continued interest of corporates. Not only are they partnering with startups to build facilities, such as bio-chemical plants, they are becoming avenues to an exit. With the IPO market the way it is, it is useful to view corporate acquisitions as potential exits from the start of an investment, says Twitmyer.
While LP money isn’t as abundant as it was – “they are limiting their support for the space” – cash is available for firms that can show success, says Twitmyer.
Photo of Stephan Dolezalek taken by Mark Boslet.