Term Sheet

The latest on private equity, M&A, deals and movements — from Wall Street to Silicon Valley

Just how bad were clean-tech investments?

April 24, 2013: 1:04 PM ET

Silhouette of windmills in wind farmClean-tech investments have underperformed, but that doesn't mean they're underwater.

FORTUNE -- Conventional wisdom is that venture capitalists have taken a bath on clean-tech, thanks to high-profile flops like Solyndra and Fisker Automotive. But new data suggests that such examples are exceptions rather than the rule.

Cambridge Associates today published its first-ever set of performance statistics statistics on investment into private cleantech companies, based on a data set of over 1,200 deals for 644 companies since 2000. The deals represented over $21 billion in capital from 302 venture capital funds and 106 private equity funds, with nearly three-quarters of the dollars disbursed to U.S. companies.

CA found that these deals produced a gross internal rate of return (IRR) of 6.6% through the end of Q3 2012, and a gross total value to paid in capital multiple of 1.2x. That's several miles below spectacular -- particularly since the net IRR to limited partners is closer to 2.2% -- but it's not the black hole that many have made clean-tech out to be.

Moreover, U.S. clean-tech companies outperformed foreign clean-tech companies, generating a gross company-level IRR of 7%.

CA also broke down clean-tech into four sectors, finding the strongest gross IRR performance in renewable power development (11.4%) and the weakest in resource resolutions (1.4%):

Capture

In its commentary, CA cautions that cleantech investment is still relatively young -- with 89% of the investments coming since 2005. It adds that many investors have dropped out of the sector lately, which should reduce future investment volume but improve remaining returns.

Sign up for my daily email newsletter on deals and deal-makers: GetTermSheet.com

Join the Conversation
About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

Email a Tip | @danprimack | RSS
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.