When people ask me, are investors making money in cleantech, I tell them yes, but not by whom or in what you thought they were.
Most of the analyses of cleantech exits do not differentiate for venture backed companies. So we conducted our own study.
In the last 10 years, Cleantech.org’s Cleantech Venture Backed M&A Exit Study shows a grand total of 27 venture backed cleantech deals > $50 mm.
All in all, very tough returns. A number of 8 to 10 figure fortunes made, just laregly not by the investors spending the 9 and 10 figure investments.
19 where we had data on both exit values and venture capital invested, 8 where we had revenue estimates.
We found a 2.78x Median Exit Value Multiple on Venture Capital Invested
– Those exit numbers include the founders and management’s shares, so average returns to investors would be somewhat lower.
We found a 2.2x Median Exit Value Multiple on Revenues.
$13 Billion in total M&A exit value. Not bad, until you realize that’s over 10 years where cleantech has seen tens of billions in investment, and we used a pretty broad definition of “venture backed”. To get there we included Toshiba’s Landys+Gyr, Total’s Sunpower, EDP’s Horizon and ABB’s Ventyx deals. Those are the top 5 deals by value, and represent 60% of the $13 Billion. None were backed by investors you would normally think of as cleantech venture capital powerhouses (Bayard Capital, Cypress Semiconductor, Zilkha and Goldman Sachs, Vista Energy). Three of them included prior acquisitions themselves.
Excluding those and looking at only the transactions where we had both valuation and exit data we found and even weaker $3.8 Billion on $1.8 Billion in venture capital, 2.1x.
Most surprising, if you looked at the list of investors in these Nifty 27 exits, you’d have heard of very few of them. This is truly not your father’s venture capital sector.
The exits have a surprisingly low tech flavor, and were carried by renewable energy project developers, ESCOs, and smart grid, and solar balance of system manufacturers.
If we had limited this to Silicon Valley venture investors in high tech deals, well, you’d have wondered if M&A were a four letter word.
Interesting, isn’t it? Contact me at email@example.com with any questions or if you’ve got deal data you’d like to see included.