Landmark report finds that Cleantech investments can deliver venture grade returns

Cleantech Venture Network Releases “Cleantech – Achieving Competitive Venture Returns” Research Report at Cleantech Venture Forum V; Findings Validate Cleantech as a Valid Investment Category

• TORONTO, CANADA, OCTOBER 26, 2004 – Cleantech Venture Network today announced
• the release of “Cleantech – Achieving Competitive Venture Returns” the first full-scale research
• report to examine venture returns in cleantech investments. The comprehensive report covers 75
• initial public offerings and 657 M&A transactions, totaling over 700 liquidity events. The report
• provides considerable evidence that investors in privately-held cleantech companies have been
• able to achieve liquidity, and documents instances in which shareholders were able to exit their
• investments with venture-grade returns. Initial report findings were presented today by Cleantech
• Venture Network co-founder and chairman Nicholas Parker at Cleantech Venture Forum V, the
• premier networking and deal-flow venue for the clean technology community.
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• “A confluence of major ‘tipping point’ events, such as $50 a barrel oil or the Russian ratification
• of the Kyoto protocol, combining with ever-cheaper and more reliable alternative energy
• technologies, we believe will drive a major shift toward cleaner energy generation and end-use,”
• said Nicholas Parker, co-founder and chairman, Cleantech Venture Network. “This research
• report is a foundation block in our effort to quantify the performance of the vibrant and emerging
• cleantech space. It helps clarify how these returns have been achieved and why they will
• continue in the future.”
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• Cleantech, also known as Clean Technology, includes a diverse range of products, services, and
• processes designed to deliver superior performance at lower costs that greatly reduce or eliminate
• harmful environmental impacts. The cleantech category currently represents annual global
• revenues of upwards of $150 billion, and has seen 5- and 10-year growth rates as high as 35%.
• Based on early research estimates, from 1994 through 2003 approximately $8 billion of venture
• capital was invested in North American cleantech companies. Up until five years ago, less than
• 2% of the total venture capital invested in North America went into cleantech companies. In the
• last two and a half years, venture investment in the category has grown to between 5% and 7%.
• Further, between Q1 2002 and Q2 2004, the value of cleantech deals climbed to $2.84 billion in
• more than 400 transactions.
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• “The data from this report provide the investment community with evidence that cleantech can
• indeed compete aggressively with other venture categories, putting to rest the notion that
• investing in cleantech somehow means accepting sub-standard performance,” said Diana Propper
• de Callejon, report co-editor and General Partner, Expansion Capital Partners. “The findings of
• this report revealed that cleantech investments have generated returns exceeding the venture
• capital average over the past decade and there is substantial evidence to suggest returns to
• investors will continue to rise over the coming decade.”
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• Key Report Findings:
• · Over the past decade, returns to cleantech investors have exceeded the venture capital
• industry as a whole, even taking into account the dot com bubble years.
• · While overall venture returns have equaled 26% over the ten years ending March 31st 2004,
• cleantech returns have approached 30%, assuming a five year hold period on investments and
• a 40% write off of investments in venture investment portfolios. The returns are considerably
• higher if these conservative assumptions are revised downwards.
• · Cleantech IPOs yielded returns to pre-IPO investors of 5.5x, generating a 27% IRR based on
• the assumptions noted above, while European venture-backed IPO generated returns of over
• 8x, generating returns of just under 40%.
• · While investors in companies that went public in 1999-2000 generally benefited from the
• 2000 mini-bubble in energy technology stocks, earning average returns of 9.6x, with an IRR
• of 42%, companies that went public before and after this period still returned over 5x to their
• early backers.
• · Over a ten-year period from June 1994 to May 2004, a market cap-weighted basket of
• cleantech stocks traded in the US, outperformed the S&P 500 and Russell 2000, and kept
• pace with the Nasdaq Composite.
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• Report Data Sources and Methods
• To estimate historical returns, data was collected on initial public offerings and mergers and
• acquisitions of cleantech companies drawing on information from the public markets for
• additional perspective. Where possible, multiple data sources were used to triangulate and
• confirm the data. As a result report findings are generally preliminary and indicative rather than
• conclusive and definitive. Data was taken from the following sources; SEC filings, company
• reports, Nasdaq, the New York Stock Exchange, Bloomberg, Vortex Energy LLC, VentureOne
• and SDC Platinum databases, and MarketWatch.
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• About Cleantech Venture Forum Series
• Cleantech Venture Forum is held twice annually, once on both the East and West Coasts, and in
• 2005 will expand to Europe. During the Forum, attendees hear presentations from companies in
• the clean technology industry, participate in meetings with key investors including business
• angels, venture capitalists, fund managers, investment bankers and corporations, and take
• advantage of leading-edge information and research on investment opportunities from leading
• thinkers on clean technology innovations and trends. Cleantech Venture Forum V takes place in
• Toronto, Canada, from October 25 to 27. Global Environment Fund is the premier sponsor. Lead
• sponsors include EnerTech Capital, Heller Ehrman White & McAuliffe LLP, NGEN Partners,
• and Odyssey Venture Partners. The keynote speakers at Cleantech Venture Forum V are Gordon
• M. Nixon, president and CEO of the RBC Financial Group; Ira Ehrenpreis, General Partner,
• Technology Partners; and Mossadiq Umedaly, Chairman, Xantrex Technology Inc.
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• About the Cleantech Venture Network
• The Cleantech Venture Network (Cleantech) is a grouping of member investors managing over
• $3 billion in cleantech venture assets. The company believes “clean technologies” – from solar
• energy to water purification – are the next and necessary wave of venture investing. Cleantech
• introduces promising young companies to investors and investors to quality deal flow. The
• company has developed a community of money managers, business executives, professional
• advisors, and other stakeholders active in the clean technology venture arena. Cleantech organizes
• venture forums, provides deal flow, publishes a quarterly venture monitor and offers related
• services to investors and entrepreneurs. Cleantech benefits from the expertise and counsel of an
• advisory board comprised of representatives from 14 leading venture capital and service provider
• firms specializing in clean technology. More about the company can be found at
• www.cleantechventure.com or by calling 517-223-9607.
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• Cleantech Venture Network invites companies and investors engaged in commercializing or
• investing in clean technologies to apply for membership as a Company or Member. For details,
• contact Lauren Bigelow at lauren@cleantechventure.com.