As other investment opportunity windows appear to close, venture capitalists appear to be turning their attention to green technologies. In 2016, venture capitalists invested in clean energy at the fastest pace seen in the past nine years.
Just last year, venture capitalists invested $834 million into the clean energy sector. This marked the third consecutive year that investment in this industry has increased, and the most since Bloomberg New Energy Finance started collecting data in 2004. Also, for a second consecutive year, venture capital investment in green projects surpassed private equity, which also dropped to its lowest level since at least 2004.
What exactly does this mean? It would appear that larger investors have turned away from green technology after large investments in 2010. When pension and general funds began to bankroll projects, it reduced their potential to profit. This has opened the door to more adventurous fund managers to return to the green industry, focusing on niche investments with bigger risks and smaller scales than the large funds would prefer.
For example, Oxford Capital Partners, LLP, invested $374 million in solar, batteries and anaerobic digestion. The firm has since installed 3.8 megawatts of solar panels and 5 megawatts of anaerobic digestion plants.
Another firm, Terra Firma Capital Partners Ltd., has invested $2.8 billion and installed 1.7 gigawatts of solar power and wind energy, among other deals. Terra Firma is now searching outside of Europe for higher returns on its investment, looking into projects in Vietnam, Saudi Arabia, Iran, Ghana and Uganda.
These two examples show that venture capitalists are investing big money into green technology as the industry continues to grow in Europe, and around the world.