Because it can take years for the millions of dollars they invest in private companies to pay off, venture capitalists usually have longer time horizons than stock investors. That could explain why the venture crowd is far more bullish on green companies than the stock market is.
In the second quarter of this year, venture capitalists poured $1.5 billion into clean-tech companies. That’s double the amount from the first quarter and triple compared with the same quarter last year. (Clean tech covers companies in a wide range of industries, including energy, biotechnology and transportation.) “The markets are awfully volatile these days, but the venture numbers that came out for the second quarter are extremely favorable,” says Tim Carey, of PricewaterhouseCoopers. “Investors still believe there are technologies out there that will provide attractive returns.”
Better Place is one of the most notable companies to have received a load of venture money recently. The company, which is privately held, is building or planning to build networks of battery stations in Israel, Demark and Hawaii, where drivers of electric cars can swap spent batteries with fresh ones in less than a minute. A consortium led by HSBC recently raised $350 million for the company, which is based in Palo Alto, Calif.
Solar energy continues to get more venture money than any other green sector, but smart-grid projects and electric vehicles are gaining ground. Wind energy is last on the list, but only because it’s considered a more mature technology and doesn’t require a lot of investment in research and development.