Venture capitalists are no strangers to investing in green technologies. Environmentally friendly companies have received a steady flow of venture funds since 2006. But 2016 saw the fastest growth in venture-backed green tech in nine years and 2017 looks like it will surpass last year’s numbers.

1. VCS GO GREEN
IN 2017
ᐧ L A R R Y S C H E I N F E L D ᐧ

2. V e n t u r e c a p i t a l i s t s a r e n o s t r a n g e r s t o i n v e s t i n g
i n g r e e n t e c h n o l o g i e s . E n v i r o n m e n t a l l y f r i e n d l y
c o m p a n i e s h a v e r e c e i v e d a s t e a d y f l o w o f v e n t u r e
f u n d s s i n c e 2 0 0 6 . B u t 2 0 1 6 s a w t h e f a s t e s t
g r o w t h i n v e n t u r e - b a c k e d g r e e n t e c h i n n i n e y e a r s
a n d 2 0 1 7 l o o k s l i k e i t w i l l s u r p a s s l a s t y e a r ’ s
n u m b e r s .
LARRY SCHEINFELD

3. LARRY SCHEINFELD
In 2016, venture capitalists
invested $834 million in the clean-
energy industry. This is the third
and biggest consecutive annual
increase since Bloomberg New
Energy Finance began collecting
these data in 2004. More
significantly, venture capital for
green projects surpassed private
equity for a second consecutive
year. Meanwhile, private equity for
the green tech sector dropped to
its lowest levels since 2004.
The data suggest that the 2010 push
by mainstream investors against
venture capitalists has come to an
end. Together, venture capital and
private equity firms invested $3.8
billion into green energy, primarily
wind and solar power, in 2010.
However, they were soon pushed out
by pension and general funds that
started financing green projects,
thereby reducing venture capitalists’
profits. But figures from 2016
suggest that the push is over.
Adventurous venture firms will keep
investing in the green tech industry
well into this year.

4. LARRY SCHEINFELD
Just as they did last year, venture firms
are expected to focus on niche green
tech investments in 2017. Although such
investments carry bigger risks are on
smaller scales than mainstream venture
capitalists usually prefer, they offer
excellent opportunities for reward.

5. LARRY SCHEINFELD
One niche that venture is looking into anaerobic digestion and solar power.
Anaerobic digestion turns farm waste into electricity. Oxford Capital
Partners LLP built 5 megawatts of anaerobic digestion plants across the
United Kingdom. The venture capital firm also invested $374 million (300
million pounds) in solar panels, installing 3.8 megawatts of panels on
Bombardier Inc.’s wing assembly plant in Belfast, Ireland.
Like Oxford, Terra Firma Capital Partners Ltd. has invested in solar power, but on
a much larger scale. Terra Firma has installed 1.7 gigawatts of solar and wind
power in Europe as part of a collection of deals worth $2.8 billion. But even
though these sources of European energy remain a focus for Terra Firma, the firm
will spend 2017 searching for opportunities beyond the continent.

6. LARRY SCHEINFELD
Wanting higher returns, Terra Firma’s senior adviser and
chairman of its solar unit, Ingmar Wilhelm, expects increased
opportunities in Africa, Asia, and Latin America to compensate
for lagging opportunities in Western Europe. The company is
evaluating projects in Ghana, Iran, Saudi Arabia, Uganda, and
Vietnam.
London-based venture capital firm Zouk Capital LLP is another
emerging player in the green energy and resource efficiency
field. Like Oxford, Zouk is looking at waste-to-energy projects.
“We cannot look at waste in the same way we have in the past
where you just dig a hole in the ground,” observes Massimo
Resta, an investing partner. “We need to recover the valuable
materials and use it to produce electricity.”

7. LARRY SCHEINFELD
Zouk is also looking into batteries,
biogas, and charging stations for electric
vehicles, but it is not planning to work on
solar and wind power. According to Resta,
“Conventional renewable energy is now
about sourcing cheap capital and
deploying economies of scale,” which is
not Zouk’s “type of play.”

8. LARRY SCHEINFELD
Octopus Investment Ltd. is yet another
British firm that is a major player in the
solar and wind industry, having invested
over 2 billion pounds. Like its peers, the
company is also considering investing in
batteries. In addition, it is working with
pension funds to match liabilities with
projects, thereby generating stable
returns from the steady cash flow from
clean power sales.
With so many high-profile
green projects on the
horizon for a number of
venture capital firms,
2017 promises to be
another strong year that
will surpass 2016’s
numbers.

9. THANK YOU larryscheinfeldvc.com