Forum: VC funds scarce for cleantech

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Cleantech startups may go begging for VC cash.

If you're an entrepreneur with a great idea to start a huge solar production operation, you may be out of luck.

I checked out a SVForum panel discussion on cleantech's "investment landscape" last week, and the conclusion among the panelists was that venture capital money is not going to be funding clean tech companies that need hundreds of millions of dollars for capital-intensive business models.

"Venture capital is not a vehicle to fund science projects," said Jason Matloff of Battery Ventures.

Venture capital's sweet spot for cleantech companies is in the $50 million to $70 million range, Matloff said. But during the last decade, companies were raising hundreds of millions to scale their manufacturing operations and bring products to market. (The name Solyndra was never uttered, but it did seem like the elephant in the room.)

Matloff said that was a unique circumstance because money was flowing in from hedge funds, government, and other sources — money that is no longer there.

The hundreds of millions of dollars that were previously available in federal grants "just added to the frenzy," Matloff said. "People saw a golden ticket. I think those days are over."

So which companies are getting funded? Capital-light projects, like companies that have a big software element - smart grid, for example.

"I think there are still opportunities," CMEA Capital's Rachel Sheinbein said. "I think people are really getting smarter about the relationship between venture capital and cleantech, and it's not everything in the sector."

Read more in the Silicon Valley/San Jose Business Journal.