Corporate Venture Capital in Clean Tech

One of the often overlooked areas of venture financing is the significant level of investment by corporate VCs.  Their participation in the market of investing follows VC funding trends in general and make up about 6-7% of dollars financed.  For the last 10 years or so, Corporations have invested along VCs in about 16-17% of VC financed deals.  For the 1st 3 quarters of this year, CVCs have participated in 15% of the deals and provided 9% of the capital according to this brief at the NVCA site:  Corporate VC Investment Remains Strong in Q3.

In this report, NVCA had broken out cleantech company investments by VCs & Corporate VCs.  Clean Tech investment crosses several industry boundaries and is not separated out in the main data.  For the last 21 months CVCs have invested in 118 of the 820 Clean Tech financings (14.7%), $1.1 B of the $7.2 B invested (15.0%). 

One of the early indicators of the frothy internet market that I remember from the mid-late 90s tech  boom was the number of CVCs participating in venture financing rose rapidly as the financings approached the peak (no more rapidly than VCs proliferated certainly, but noticeable because it was novel).  It seemed every early stage financing or VC investment conference  had a section that included CVCs and their investments.  It was interesting to contrast and compare institutional money (VCs, PE funds, hedge funds) with the CVCs and their approach to buying resources or technology developments or commercialization of new products that was faster, cheaper and more effective than growing their own internally.  It was a pretty decent risk mitigation strategy.

CVC_Profile_Thru_2011_Q3 (1)

But with the collapse of deal making in early 2000, the CVCs just about disappeared from the radar.  Certainly there were a large number of companies that still invested during the down days of 2001-2004, but their abscence at conferences and meetings was as obvious as their prior presence had been during the boom times.  And their presence is still rare.  

The National Venture Capital Association (NCVA) releases a variety of reports about the state and health of the Venture Capital industry.  One of the most useful periodic reports is the quarterly report of VC investments with their partner (and LAVA sponsor) PricewaterhouseCoopers.  PwC routinely presents this data at a LAVA hosted event – Shaking the Money Tree (next one examining 3rd quarter data will be 1 Dec at Shutters on the Beach).  The attendees at the Caltech Enterprise Forum event weekend before last on Early Stage Funding got a look at the data for last quarter as well as a very informative panel discussion with local entrepreneurs and keynote speaker – John Greathouse of Rincon Ventures