The Cleantech Bust

Most businesses experience a cycle of booms and busts.  In the investment community, there is always a lot of talk about the booms — and far less on the busts.  And for early-stage companies, there is a sector which has seen a particularly impressive and widespread crash: cleantech. Like an ill-advised victory banner, the promises of 2008 have proven entirely elusive. Indeed, the irony is that the fallout from the collapse of many cleantech industries are perhaps best described as nuclear.

In 2008, venture capital investment in cleantech was over $4.1 billion dollars.  And in the sort of leverage that early stage investors claim to hate but rarely refuse, the federal government came late to this party and then binged on a potent mix of loans, subsidies and tax breaks: pouring in an additional $44.5 billion into the sector between 2009 and 2011. A few short years later, and pretty much all of it is gone.

A long and poignant article in Wired details the CleanTech bust with a focus on a company that became a political lighting rod during that last presidential election: Solyndra.  But the piece goes far beyond any single scapegoat to point out the factors contributing to barriers in many industries: solar, wind, algae, batteries, and smart meters.  Unlike the internet boom in the 90s, which one might argue sowed the seeds for the commercially profitable companies in this decade, it’s not clear that cleantech can come back. This is not the inconvenient truth most associated with the environmental movement, but for anyone interested in the promise and problems of cleantech, it’s a dilemma that money is unlikely to solve and without an answer blowing in the wind.