David Kirkpatrick

September 23, 2008

Venture capitalists not concerned about green tech bubble

Filed under: Business, et.al., Science, Technology — Tags: , , , , , — David Kirkpatrick @ 10:07 am

I’ve blogged about VC funding and green technologies here, and this release from today on a KPMG study seems to bear out the idea that venture capital investment will continue to flow into the greentech space.

The release:

Venture Capital Community Not Worried About Greentech Investment Bubble, See Significant Increase in 2009 Funding, KPMG Study Finds

VCs hedging their bets across greentech sub-sectors, see Brazil and Israel as attractive targets; project crude oil prices to end year over $120 per barrel

NEW YORK, Sept. 23 /PRNewswire/ — The venture capital community is not worried about a greentech investment bubble, and expect investment in the greentech sector to significantly increase in 2009, according to a recent survey by the U.S. audit, tax and advisory firm KPMG LLP.

In polling 301 venture capitalists, corporate executives, entrepreneurs and bankers, KPMG found that 91 percent of respondents indicated they expect venture capital activity in the greentech sector to continue rising in 2009, compared to only 76 percent who indicated the same the previous year. In fact, some 50 percent of respondents say investment activity in greentech will increase by 20 percent or more over 2008 levels, while another 34 percent expect  investment levels to increase by 10-19 percent range.

According to the KPMG study, 67 percent of respondents say the focus on greentech is a sustainable investment cycle, not another investment bubble.

“There is no doubt that the greentech sector is very active with many companies receiving significant funding,” said Packy Kelly, KPMG partner based in Silicon Valley and co-leader of its venture capital practice. “Our data showed that investments are being made across all sub-sectors of the greentech space”

When asked which sub-sectors of greentech would receive the most investment over the next two years, the responses indicate that investments will be diversified.  Fifteen percent of respondents say energy storage (fuel cells, batteries, etc.) will see the most funding, followed by clean coal and wind with 14 percent each.  Alternative fuels and solar rounded out the top five with 11 percent and 10 percent respectively. Interestingly, when asked what will become the dominant clean-air energy source in the next 20 years, 39 percent of venture capitalists say solar, 27 percent say nuclear and 18 percent say wind.

Fifty-three percent of respondents to KPMG’s survey expect end of year crude oil prices to be higher than $120 per barrel – only 13 percent expect oil prices to drop below $100.  Moreover, 47 percent of respondents feel that oil prices won’t peak until after 2010, while 24 percent expect we will see the peak in this second half of 2008.  Fourteen percent think the peak will come in 2009.

With regard to where greentech investment will be spread geographically in the United States, 60 percent of respondents say it will be directed toward the West, followed by 14 percent for Southwest, 13 percent for Midwest, and nine and four percent for the Northeast and Southeast respectively.  Outside the U.S., and beyond China and India, venture capitalists expect greentech investment to be geographically diverse, but Brazil, selected by 28 percent of respondents, and Israel, 27 percent, are the clear areas of opportunity. Russia (11 percent) and South Korea (10 percent) were the only other countries to top double digit response rates.

“As with any good long-term investment strategy, diversification is essential,” said Brian Hughes, KPMG partner based in Philadelphia and co-leader of its venture capital practice. “With technology innovation taking place across the globe, venture capital investors are focused on capturing emerging-market opportunities.”

KPMG conducted the survey in partnership with AlwaysOn, the venture capital new media organization, in advance of the GoingGreen conference taking place in San Francisco on September 15-17.

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International. KPMG International’s member firms have 123,000 professionals, including more than 7,100 partners, in 145 countries.

 
Source: KPMG LLP
 

Web site:  http://www.us.kpmg.com/

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