The Economist October 31, 2020 pp55-57 |Business|Climate change and innovation “Greenbacks for greenery”. “Climate-conscious venture capitalists are once again placing big bets on clean technology. Can they make money and protect the planet?”
Clean-tech venture capital deals have gone from 1,000 in 2010 to about 2,300 in 2020 for a value of $10B in 2010 to about $34B in 2020. What started in 2010 as mostly American has grown to $18B U.S., $7B EU, $4B ROW and $3B China.
Summary of article
Investing in clean energy has not been for the“faint-of-heart” as “Green VC…in the late 2000s..experienced a boom and bust cycle in America and, to a lesser extent, Europe…Many companies when bust. Their VC backers lost more than half or the $25B they had bet. Capital dried up.” As it turns out, investing in Green Tech has a long investment cycle and creating demand is difficult for some innovations that are not any better functionally than existing products like cement, accounting for 8% of global greenhouse gases and steel at about 7-9% of global greenhouse gases. Such important investments probably need “targeted government procurement.” “Mr Gates is planning a fund that uses auctions to buy clean tech with the lowest price.” “This he argues, will stimulate demand and lower costs.” Read the article for all the backstories and detail. See below some detail.
Companies and organizations mentioned
Form Energy-Mateo Jaramillo, cofounder 2017. Work to extend storage battery life. Expect to scale by 2025.
Green River Energy-Minnesota Utility collaborating with Form Energy
Breakthrough Energy Ventures-Bill Gates and other billionaires.
Eni Next (Italy)-Italian Oil VC Arm.
The Engine-Fund run by MIT.
International Energy Agency (IEA)-“a global forecaster” believes 25% of emission reductions by 2070 will come from mature industries like hydropower and 41% will “come from relatively new technologies” each having a small share of the market an example being “offshore wind” energy generation. Innovations like “battery-powered ships or aircraft” could account for 17% each.
Cleantech Group-A research firm providing investor data mentioned below. They note that “big business is involved in about a quarter of deals now compared with only 16% in 2010. “Corporations, for their part, are on the lookout for new technologies to help them decarbonize or cut energy costs.”
Tesla. Currently investors are “looking at a broader range of cleantech” with about half of value will be in “low-carbo transport”, encouraged Tesla’s credulity-stretching success.” Elon Musk’s 14% stake of $6.5M is worth $385B today.
Impossible Foods-“a $4B plant-based-protein firm backed by Mr Gates and Google and Beyond Meat.”
PWC, a consultancy “estimates that of the biggest 5% of early-stage VC deals between 2013 and 2019, one in ten involved pure software firms.” “Another six in ten … integrate clever algorithms with clean hardware”…enabling a push of cheaper hardware “beyond its previous limits.”
Rivian-electric vehicle maker is backed by Amazon as is Redwood Materials a battery-recycling firm.
Clean, Renewable and Environmental Opportunity (CREO)-an investment group of 200 investment families.
Emerson Colective-Laurene Powell Job invested in a “dozen climate-tech start-ups.”
Terrapower-Advanced nuclear reactors reactors-Bill Gates.
Carbon Engineering-build machines that suck CO2 out of the air.
Plugpower-Hydrogen-Powered forklifts used by Walmart and Amazon
New Energy Risk-insurance company that helps firms manage investment risk.
QuantumScape-a battery start-up investors include Bill Gates and Volkswagen
Vionx Energy-large scale flow batteries.