Clean technology investing has been going through a tough time in the press and investing circles lately, as the wave of optimism in the sector has been tempered by a mature realism dogged by negative headlines.
Yet forward thinking corporate investors are generally looking to invest for the long term in the sector, as my forthcoming feature out in our March issue will document.
A good example of this trend was last week’s EnerVault deal, which saw the four-year old, US-based energy company round up a global syndicate of corporate and venture investors.
That a $15.5m funding round attracted the attention of France-based oil major Total, as well as Japanese conglomerates Mitsui and Tokyo Electron, and American innovation powerhouse 3M, among other investors, arguably indicates this portfolio company must do something special. Or else why would the corporations bother to spend the time partnering with a start-up, especially given that, until recently, 3M New Ventures had a preference for being the sole corporate venturing unit or investor for a portfolio company?
There was certainly demand to invest. EnerVault’s spokesman Bret Adams said the company had turned some investors away because the round was over-subscribed.
Adams said: "We definitely would like to become a global company. Having the European and Asian perspective [of Total, Mitsui and Tokyo Electron] was important and was part of our thoughts there."
How does such a diverse international syndicate get involved in such a deal? Keiichi Enjoji, president of Tokyo Electron’s corporate venturing unit, TEL Venture Capital, said his company had been introduced to the deal by its venture network. Enjoji added: "Through this investment we would like to learn about this new technology and industry for us, which has huge market potential and contributes to society."
According to Adams, EnerVault, which develops electric energy storage systems for commercial and industrial facilities, renewables support and utility grids, expects to benefit from increased demand for energy storage across the globe. In part, this is driven by the US updating its grid, and Asian countries expanding their grids, as well as demands on countries to increase their use of renewables.
It also reflects part of the new thinking about clean-tech investing for venture investors – that it is perhaps easier to make substantial returns in a relatively defined time frame from areas supporting the sector rather than in creating new forms of clean energy.
Given these macro-trends EnerVault is certainly one to watch – a thought which also goes for the rest of the sector. As will be seen in the forthcoming March clean technology feature there are a lot more corporates eyeing deploying considerable funds into clean-tech, even as some financial investors are getting cold feet.
Driven by strong clean tech investment, corporate venturing units put the most money into the industrial/energy sector where $974m was invested in 95 US deals, according to the PricewaterhouseCoopers’ MoneyTree report published by local trade body the National Venture Capital Association. The report also showed corporate venturing units participated in more than one-fifth (22%) of the clean-tech deals and provided nearly 15% of financing in the sector since the beginning of 2010.
If investor Warren Buffett’s maxim to be "greedy when others are fearful" is correct, these corporates will be well rewarded for staying the course.