Majority of venture capitalists predict growth in cleantech sector

18 December 2009

Venture capitalists are optimistic about the future of cleantech investments, investments in late stage companies and ongoing investment opportunities overseas, according to the National Venture Capital Association’s (NVCA) annual predictions survey.

Clean technology is the industry where most venture capitalists predict growth, with 54 per cent forecasting higher investment levels in 2010, above any other sector including the Internet, in which 46 per cent predicted higher investment levels.

Mark Heesen, president of the NVCA, said, ‘There is a great deal of innovation taking place and venture capitalists who have the track record to raise funds will be well positioned to build companies. Most venture capitalists will agree that a smaller industry is a better one.’

A vast majority, 70 per cent of venture capitalists, anticipate growth in China-based investments and 58 per cent seeing greater investment levels in India in 2010. To the contrary, just over half of the venture capitalists interviewed, 53 per cent, believe investments in Israel will decline in the coming year, and 45 per cent believe that venture capitalist investment in Europe will remain the same.

A significant 53 per cent of respondents see growth in later stage investing, compared to 45 per cent that predict growth in early stage investments, with 49 per cent predicting growth in expansion stage investing.

‘Of all the predictions put forth this year, a collective lack of enthusiasm for seed and early stage investing is the most concerning,’ said Heesen. ‘The weak exit market combined with proposed tax policy which would discourage long term investment puts tremendous pressure on our industry to move towards later stage investing.’

Most venture capitalists are optimistic about the acquisitions market, with 91 per cent believing the number of deals will increase and 63 per cent predicting that the value of those deals will be higher. Venture capitalists predict a mild improvement in the number of venture-backed initial public offerings (IPOs) in 2010, with 74 per cent believing there will be over 20 IPOs next year across all industries.

An 87 per cent majority of venture capitalists believe that funds raised in 2010 will be smaller than previous funds, with 48 per cent predicting that more foreign limited partners will invest in US venture funds in the coming year.

The study found on a more general note, 90 per cent of venture capitalists predict that the number of venture capital firms will decline over the next five years.

The National Venture Capital Association represents more than 400 venture capital firms in the US. According to a 2008 Global Insight study, venture-backed companies accounted for $2.9tn in revenue in the US in 2008.

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Tags: cleantech

This story was published on Friday, December 18th, 2009 at 5:58 pm and is filed under Europe, North America, companies, energy efficiency, knowledge. You can follow any responses to article entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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