Looking Back At 2013's Cleantech Investing Predictions
It's that time again! Time to look back on my predictions from a year ago and see how the year turned out... It's also a good excuse to take our minds off that horrible 60 Minutes "news" story from this past week.
Whatever. The cleantech revolution may not be televised, but it's already powering your T.V.
Anyways, here were the predictions and how they turned out:
1. U.S. cleantech deal counts will be flat in 2013 (within 10% plus or minus) of 2012 levels, and dollar amounts will be down.
Hey, nailed one! A stopped watch is right twice a day, I guess.
My reasoning at the time was simple. LPs weren't jumping back into the sector, so VCs didn't have more capital to put to work. That said, the numbers for 2012 were already down, so it seemed unlikely they would fall further in terms of deal counts, while dollar amounts would probably continue to go down as bigger deals fell out of favor.
And as it turned out, deal counts were flat in the US (638 in 2013, vs. 644 in 2012) according to the Cleantech Group. And as it turned out, dollar amounts did fall, from $5.7B down to $4.3B.
Interestingly, however, I've seen other tallies that show a significant decline in both deals and dollar amounts. But these were energy-specific counts. I think what we saw in 2013 was the beginning of the real convergence of "cleantech" with other sectors (especially web/IT), and shifts within the "cleantech" category from energy into other areas. And that all plays havoc with the various tallies, since definitions of "cleantech" continue to vary widely. One thing is clear, however: A couple of the more popular subsectors from a few years past (e.g., upstream solar, biofuels production) are now very much out of favor. And if that's your image of what "cleantech" is at this point, then you probably think 60 Minutes did a good job this past sunday.
2. Agriculture-related investments will be the next "new new thing" area for venture investments.
I'm going to give myself partial credit on this one. As I explained, everyone already saw Cleanweb as an exciting new area, but meanwhile I was hearing a lot about agriculture from VCs but not seeing it talked about much by cleantech journalists and others.
Well, agriculture-related venture investments did rise, from 68 in 2012 to 82 in 2013, according to the Cleantech Group, who described agriculture as "trending". But it wasn't a massive shift. And there were certainly hotter subsectors. So perhaps I was a bit early, but regardless, I can't give myself full credit for this one.
3. There will be a wave of consolidation and shake-out in solar financing.
Being early looks an awful lot like being wrong. There has certainly been some vertical consolidation, but not the horizontal consolidation I expected. I still expect that the multiple financing platforms out there will have to combine efforts, and now as some are increasingly well capitalized, they should be in a better position to do so. But it didn't happen in 2013.
4. Large corporates will continue to play a vital role in keeping cleantech entrepreneurship vibrant -- but there will be a shift from oil / chemicals to consumer products, IT and industrial equipment/controls strategics, in terms of level of activity.
This definitely happened. And especially at the intersection of IT / and cleantech (be that web + data + efficiency, or industrial controls + energy), we saw a lot more seriousness in applications relevant to the sector -- although I'm not sure these corporations would ever say they were interested in "cleantech", just the specific applications of interest to them. Regardless, it was a big year for corporates stepping into the sector with clear strategic intent, for M&A and venture investments and partnerships. I expect this trend to continue.
5. There will be no significant progress on US federal energy policy.
This one was a short putt to begin with.
6. 2013 will be the year journalists (and thus everyone else) figures out that US cleantech entrepreneurship has become driven as much by family offices and other non-VCs as by VCs themselves.
Being early looks an awful lot like being wrong. I'm starting to see some hints of this dawning realization, but just hints.
7. Large-format (e.g., stationary) energy storage will be the next sector to see multiple high-profile flameouts.
Being early looks an awful lot like being wrong. And right now, with big batteries all the rage, it looks very wrong. I still think this looks a lot like upstream solar panel manufacturing did and expect a serious price commoditization wave sooner rather than later. But boy howdy, that didn't take place in 2013, which was actually a really positive year for the subsector.
8. At least two well-known cleantech-focused venture capital firms will publicly shut their doors or at least acknowledge they won't be raising any future funds.
Why did I make a point of saying "publicly"? No one ever does such things publicly. We saw several cleantech-focused firms, and cleantech-focused teams at generalist firms, effectively shut their doors and shed their teams. But not many would make a big point of announcing it, now would they. Dumb prediction.
9. Natural gas prices in the US will spike at least 50% at some point during the year.
Note that I wasn't talking about an end to the current period of low-cost gas. Just pointing out that demand spikes and limited storage often means price spikes in this industry.
During the year, prices rose from $3.30 a therm up to $4.52. Which is a 37% jump, not 50%. Oh well.
10. The Redskins will make it at least to the NFC semifinals round of the 2013-2014 season.
Wow. I mean... wow. Was this the jinx of all time, or what.
I'll post some 2014 predictions in a few days. And they will not include any predictions about any D.C. sports teams doing well next season... yikes.
Photo Credit: 2013 Investiing Predictions/shutterstock
Rob Day is a Partner with Black Coral Capital, based in Boston. He has been a cleantech private equity investor since 2004, and acts or has served as a Director, Observer and advisory board member to multiple companies in the energy tech and related sectors. Rob was a co-founder of the Renewable Energy Business Network (www.rebn.org), a non-profit organization which was acquired in 2009 by ...
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