When taking care of the environment became trendy about a decade ago, venture capitalists shifted large amounts of investment dollars from software and the Internet to “cleantech,” anointing it as the next big thing in investing.
With global concern about greenhouse gas emissions and other pollution on the rise, the move made sense. Betting on little companies in the clean energy sector had the potential to become a big win for all. But then the cleantech bubble burst.
Three dozen venture capital firms invested $25 billion in cleantech start-ups between 2006 and 2011, and lost more than half of their money, says a July 2016 report from the MIT Energy Initiative. MIT’s researchers found the venture capitalist model to be broken for the cleantech sector. The why is hard to figure, but bad timing and the slow nature of cleantech start-ups to grow factor in. Yet the hard truth is that more than 150 renewable energy start-ups in Silicon Valley alone that launched since 2006 are no more.
However, there is a prevailing opinion that cleantech may be turning around because of elevated interest in leveraging technology and efficiency to meet its promised emissions reduction agreed to in the Paris Climate Accord. Bill Gates announced he is launching a new venture fund, the Breakthrough Energy Coalition, with a little help from 27 wealthy friends like Jeff Bezos, Richard Branson and Mark Zuckerberg. The new type of investment aims to not only make its investors money, but also help the environment. Gates and his co-investors believe that others will join them to re-energize innovation and potentially create millions of new green jobs.