VCs Are Starving Early Stage Cleantech Startups, Angels Seize Opportunity

A majority of venture capitalists say playing harder in cleantech is a top priority. They might want to take a second look at the investment strategies they hope to use.

That’s because late-stage investing is hot, early stage is not and angels are stepping in to fund more of the first-round deals that could become tomorrow’s energy powerhouses. In other words, VCs are in danger of missing the early stage cleantech boat.

The data is disturbing. Early stage cleantech money fell 52% to $424 million last year compared with 2007. Of course most everything was down in 2009, so this figure alone doesn’t make the case. More alarming is that early stage and seed investing fell as a percentage of overall investing: to 20.4% from 34.6% two years earlier, according to data from Thomson Reuters (the publisher of this blog).

Angels meanwhile raised their game. Cleantech accounted for 17% of their investments last year compared with 8% in 2008, according to the University of New Hampshire’s Center for Venture Research.

Cleantech could fuel the venture business for the next decade. Long-term strategies appear to be suffering for want of some near-term exits.

For a more on this topic, see my story on Reuters.com.

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