Is Trump vs. VCs a battle to come?


Donald Trump, VC, venture capital, politics, greentech, Obamacare, Steve Vassallo, Foundation Capital

Now that a new administration has moved into the White House, we will soon learn how a Donald Trump presidency affects venture capital.

This is a matter I have been formally asking VCs about since Nov. 8.

Most dismiss the idea that policies from the new administration will have much of an impact. I argue, however, that the new executive and the Republican-controlled Congress could have substantial influence on VC, particularly regarding their treatment of carried interest, free trade and the H-1B visas for foreign tech workers.

Then there’s Obamacare.

Well before the new president was sworn in on Friday, congressional Republicans had been seeking to repeal the Affordable Care Act.

In coming weeks and months, look for a Venture Capital Journal series on how all this shakes out, including a package of stories next week on how the loss of Obamacare will affect healthcare investors.

Investors have reminded me that venture capital is a long-term enterprise and the whims of administrations that come and go will not stand in the way of innovation or early-stage investing.

But various sectors of interest can be severely damaged depending on Washington’s policy choices. One that I am keeping an eye on is cleantech.

I’m not going get all Chicken Little on you. I’m sure you’ve seen the headlines and read the news and know of the cabinet picks, such as Scott Pruitt, who as attorney general of Oklahoma initiated lawsuits against the Environmental Protection Agency, the organization he has been tapped to run.

In addition, having climate skeptics as part of the new administration can’t be good for cleantech. Soon after the inauguration last week, the White House website removed the page devoted to climate change action and posted a pledge to undo environmental regulations and “revive America’s coal industry.”

So how will the new government affect cleantech investing?

I posed that question to Steve Vassallo, general partner at Foundation Capital. The firm was a backer of energy-storage maker Sunrun, which went public in 2015.

Vassallo sits on the boards of Sunrun, Aquion Energy,  Sentient Energy and AutoGrid. He sees Aquion’s energy-storage technology (saltwater batteries) as a game-changer in several key markets. Aquion was one of the largest cleantech deals in 2016.

As I reported earlier this month, in 2016, cleantech startups and late-stage companies raised $1.55 billion in funding, 16 percent less than the $1.85 billion raised in 2015, according to VCJ‘s analysis of venture deals from Thomson Reuters data.

Deal count also dropped, to 160 in 2016 from 210 a year earlier, a 24 percent decline.

In an email, Vassallo said he doesn’t expect Congress or the executive branch to have much of an impact on funding or innovation in this area.

“No doubt, the casual cleantech window shoppers of 2007 are long gone,” he said. “But fundamental energy innovation will march forward at the hands of tireless entrepreneurs in search of a better way and with no patience for politics.”

In a phone conversation, Vassallo said the cleantech market is back to where it was before the bubble, the 2007 peak.

“It was frothy for a while, but those of us who were interested in cleantech before it grew in popularity remain so,” he said.

“And don’t forget that distributed solar has enjoyed strong bipartisan support, so I don’t expect this to slow down, particularly in light of the local job creation and economic growth rooftop solar has catalyzed over the last decade.”

 Photo courtesy ©iStock/AndreasWeber

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