After years of rapidly growing investment, the cleantech sector was one of the real losers of the 2008 global financial crash. Some $8.4 billion was invested into the burgeoning industry in that year alone, but the crash meant that by 2014 levels of investment had reached only that of 2007. Further economic uncertainty has affected the industry but a new venture backed by some huge names is promising to revitalize the area with new investment.
Breakthrough Energy Ventures (BEV) has been put together by high-profile investors including Jeff Bezos, Bill Gates, Vinod Khosla, John Doerr, Jack Ma and 15 others. According to TechCrunch, the venture firm will ‘pour at least $1 billion into cleantech companies over the next 20 years.’ The venture firm hopes to provide the capital for effective research into cutting down greenhouse gas emissions to almost zero and developing workable new clean energy technologies.
‘I am honored to work along with these investors to build on the powerful foundation of public investment in basic research,’ BEV chairman Bill Gates said. ‘Our goal is to build companies that will help deliver the next generation of reliable, affordable, and emissions-free energy to the world.’ Gates plans on being actively involved in the running of the fund, throwing a challenge out to tech innovators, saying: ‘Anything that leads to cheap, clean, reliable energy we’re open-minded to.’
Gates, the world’s richest person expressed his interest in clean energy last year when he was among 28 individuals to sign onto the Breakthrough Energy Coalition. He announced his plans to personally invest $1 billion into cleantech last year, and the venture fund is the multi-billionaire’s first concrete step toward taking an active organisational and financial role in fighting climate change.
BEV will bolster the UN’s climate change initiative Mission Innovation, ‘a multi-billion clean energy research and development initiative,’ according to Fortune. Both will look to invest in innovative energy startups, some of which will be risky and therefore otherwise unattractive to private investors. Billionaire natural gas trader John Arnold said: ‘The dearth of venture funding for clean energy technologies threatens to create a valley of death for the industry, with emerging ideas unable to find the necessary capital to reach commercialization.’ Both the BEV and Mission Innovation aim to breathe life into otherwise stagnant ideas.
In fact, the label of ‘cleantech’ itself is arguably holding the industry back thanks to shoddy past performance. A study from MIT estimates that, of the $25 billion invested by VC firms between 2006 and 2011 in cleantech, over half was lost. ’I don’t like ‘cleantech’ as a term,’ said Peter Davidson, CEO of Aligned Intermediary. ’When people think of clean energy investing they all think, ‘Oh, we did cleantech 10 years ago and we all lost money.’
The bet made by VC firms from 2006 onwards - that the energy sector is ripe for disruption - is still, in theory, a sensible one. Aside from often being cheaper for the user, clean energy is also fashionable. If Tesla can lead the way in the overthrowing of the petrol engine, for example, it stands to reason that other innovative companies could do similarly well with replacements gas heating or coal power. Support from government may be crucial, meaning more forward-thinking countries will likely flourish in the sector. Those that neglect the emerging tech may just miss out on the next booming industry.