20 Jan 2011
By Ian Stuart
Investments will remain vibrant, and industries to watch will include efficiency, biofuels, nuclear, recycling, and natural gas, clean tech analysis and consulting firm Kachan & Co. predicts a strong 2011 for alternative energy technology. Accordingly, the clean tech sector will continue to attract high levels of investment and foster innovation in new and unexpected areas in 2011. In brief, some predictions include...
• Sustained worldwide VC investment in clean tech
The industry is not on the downside of a bubble, Kachan believes, citing near record venture investment worldwide in 2010, massive funds still being raised by clean tech investors, and expectation that 2011 will bring an even more tangible appreciation of the drivers of cleantech: resource scarcity and the need for greater efficiencies, energy independence, and climate change.
• A return to early stage venture investments
Kachan forecasts a return to early stage venture capital investing in clean energy. Already, in the last few months of 2010, data showed an increase in early stage deals with investors piggybacking less on US government grants and loan guarantees, which had skewed investment into more mature clean tech companies.
"In 2011, venture investment in clean tech will return to what it does best: seeking out emerging early stage technologies and teams that promise good multiples, and will be less influenced by governments putting large amounts of capital to work themselves," maintains Kachan. "Funds are still being raised. And those funds will need to be invested."
• Energy efficiency emerges as the clear rock star of clean tech
"In 2011, look for efficiency to become the clear dominant investment theme as investors continue to seek less capital intensive efficiency plays," claims Kachan, who also expects a winnowing of efficiency companies in 2011, "Partly because of concerns about differentiation, and partly because of the long sales cycles of utilities that are only starting to become understood by startups in the space."
• Biofuel investment could reach former highs
After several years of relatively inexpensive oil, an upswing in biofuels investment in 2011 is expected-specifically, in drop-in biofuels. Cellulosic ethanol, which disappeared from headlines in 2010, may even disappear from investors' portfolios in 2011, citing expectation of the US Environmental Protection Agency lowering its cellulosic ethanol volume requirements.
Full text of the 2011 predictions is available at www.kachan.com/cleantech-greentech-predictions-2011-forecast-trends.
Kachan & Co. Kachan & Co. www.kachan.com