Thursday, March 4, 2010

Investors shine a grow light on cleantech in KPMG survey

By Mass High Tech staff

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Investors, including venture capitalists and bankers, voiced confidence in the potential for VC investment in 2010, with strong growth seen for investment in cleantech, according to a survey by audit and tax firm KPMG LLP.

The New York-based firm also noted that investors expect to shift more money into energy storage and efficiency companies rather than renewable energy sources. The results of the survey, in which KPMG polled 200 investors, will be released at the GoingGreen East conference in Boston next week.

“Overall, I think the survey results were pretty positive. I think last year was a bad year. We were looking at the results and saying, ‘There’s a lot of money sitting on the bench that’s not being put in play.’ Now, I think a fair amount of the economic uncertainty has been calmed a bit,” said Ed Sullivan, an audit partner with KPMG.

Sullivan noted that the growth in interest in cleantech and in energy storage and efficiency as a subset isn’t surprising. “I think the shift to efficiency is driven by the VCs’ ability to get out of their investment a little quicker,” he said.

Looking at the overall investment area, 67 percent of the respondents said they expect VC investment to increase in 2010, compared with 2009, when an earlier KPMG study showed only 23 percent expecting an increase. Also noteworthy was that in 2009 56 percent of the respondents expected overall VC activity to decline, which this year only 7 percent predicted a drop.

On cleantech — KPMG uses the term greentech — 77 percent of respondents say investments will increase in 2010, compared with half in 2009.

KPMG noted that increased government funding of cleantech initiatives has helped to build confidence on the part of investors.

Sullivan observed that the classification of some of the technologies in energy efficiency and renewable energy is still in flux, which might explain some of the shifts between the two sectors. Respondents saying they expect energy storage and efficiency to gain most of the investment grew from 33 percent to 38 percent of the response base. Only 30 percent said they expect renewables to represent the greatest investment this year.

The research shows companies in the western U.S. dominating where the cleantech money goes, although the Northeast and Southwest will see significant funding, according to KPMG. Sullivan noted that the investment activity in the West and Northeast follows the same pattern as with other technologies because the VCs, and the companies and universities that drive innovation, tend to be located in those two sectors.