Quick! I Need a Buddy!

Green syndicates – individuals or companies pooling capital to invest directly in clean and renewable energy – saw a decline in 2012 making it hard for committed backers to find willing partners, says VentureWire.

In the first three quarters of 2012, just 30 unique investors took part in at least two clean-tech deals.  That’s less than half of the 78 unique investors who took part in at least two clean-tech deals in 2007.  Through the third quarter of 2012, 133 unique investors took part in clean-technology deals, down from 206 in 2007.

Many of the 2012 deals were “follow-on” investments, or additional investments in a portfolio company that has already received funding from a private equity firm or existing venture investors. Only 33% of all follow-on clean-tech deals included participation from a new investor, down from 48% of such deals in 2007.

At issue was the lack of impressive pay off from 2007 and 2008 investments, considered the boom years for green energy.  This made getting follow-on capital, project financing, and good IPO results difficult.

This has caused several firms to pull back on clean tech investment, including Redpoint Ventures, Battery Ventures, Draper Fisher Jurvetson and Polaris Venture Partners.

Firms planning to continue investing in and raising new funds for green energy projects have had to become more creative in finding partners.  Braemar Energy Ventures raised a $300 millions in 2012 by reaching out to corporate investors, reserving more of its own funds for follow-on investments, and examining potential co-investors more carefully by asking more questions about their capital reserves.

Investors are also changing – co-partners are coming from family offices, private foundations, venture investors with consumer product experience, as well as people and companies from China and Japan.

One firm, EnerTech Capital, isn’t having a problem finding partners.  That’s because it’s a later stage investment firm focused on revenue-producing growth-stage companies, with real customers.

To read the original VentureWire story, click here.

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