Earlier this week I was a speaker at the Toronto Greenhouse event entitled Green Predictions – 2011. I was asked to formulate three predictions for the upcoming year. Naturally I focused on what investors are thinking about.
I prefaced my predictions with the disclaimer that predictions don’t always come true. So don’t hold my feet to the fire! Nevertheless, here it goes….
Prediction one: Investors will shy away from investing in Ontario FIT dependent companies. At the moment there appears to be too many variables in regards to pricing and pending elections/political landscape. Investors like to see future cash flow models and the aforementioned variables pose risk. However, that is not to say there isn’t a market for investing in FIT dependent companies – large investors (pension funds/infrastructure investors) that have experience in renewable energy infrastructure projects will lead the way.
Prediction two: Smart-grid IT management companies will be a hot topic for Cleantech investors. These companies have relatively low barriers to entry and low cap-ex costs. They are an IT add on integration/management system for the existing grid. Very cool….
Prediction three: There will be more M&A/IPO activity in the Cleantech space. Four of the five largest VC investments last year were in Cleantech companies. These included A Better Place which received $350mm, solar thermal company BrightSource Energy at $150mm, Abound Solar raised $110mm and smart grid networking firm Trilliant received $105mm (see prediction two). The investors in these (and other) other Cleantech companies will be itching to see liquidity events. If any one of Facebook, Groupon and/or LivingSocial goes public this year, it may set off a new wave of tech liquidity events which will have a positive impact on the Cleantech sector.
With these new large cash injections, let’s be hopeful that 2011 will be the best year yet for growth of Cleantech companies.