Is there an echo in here?
The good news coming from venture capitalists last year is that they're continuing to support the growth and expansion of the cleantech industry at a record-setting pace. According to Reuters, cleantech investment topped $5 billion for 2007, a 44% jump from 2006 (which was, itself, a similar increase over 2005 numbers).
The increase puts cleantech squarely in third place behind the big tech market and medical, a rank not easily attained.
Amid recent anxiety over the possibility of a US recession – and potential impact on the global economy – the fate of cleantech investing seems to hang in a precarious balance. On the one hand, the possibility of taking a tumble with the rest of the economy cannot be ignored. And unfortunately, cleantech itself is in a precarious position, with a number of technologies very close to coming to market, but needing the capital that VCs can bring to the table to get their innovations on an assembly line and into the hands of consumers.
On the other hand, cleantech could be the very thing that the US economy needs if it faces recession. Solar panels, wind turbines and the like could help revitalize a somewhat dormant industrial base and provide a much-needed export product for the US economy.
Likewise, a broad adoption of cleantech could help reduce foreign oil dependence and, by the way, make manufacturing in the US more competitive with China and other offshore locations. A concomitant resurgence of the US auto industry with the fleet of clean vehicles being paraded around the auto show circuit in the first half of this year could also help reverse fortunes as the Big Three strive to compete with Japan on super-efficient vehicles.
While some things, like oil, are taking trips down south of three-month lows in the current atmosphere of recession anxiety, there's no solid indication that a recession would keep them there, and most consumers are jaded enough when it comes to energy prices to realize they're still paying far more than they did ten years ago with a dollar whose value is not that much removed from 1998.
Whether the stock market supports it or not, the consumer market for cleaner, greener product is still there, and VCs, more than anyone, seem to recognize that.
Though investment could slow in the face of a recession in 2008, the likelihood is that cleantech will emerge as a strong runner, and make the most out of the economy this year, no matter how it fares.
Disclosure: I'm not a Venture Capitalist and I don't own any cleantech stock, but it sure is tempting.
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