I embarked a month ago on a journey to understand the “water puzzle”: it is arguably the most important resource on the planet, yet it has seen a limited amount of venture investment despite decades of alarming stories and predictions that water is the new oil. Unlike James Bond in Quantum of Solace running after a mad man buying water wells around the globe, I simply asked international experts to help me put the pieces together.
Investments in this area represent only 3% of venture capital invested in clean-tech according to a recent report from Mia Javier, Sr. Research Analyst at the Cleantech Group. The $257M invested in 47 companies in 2010 spanned across water treatment (47%), waste water (41%), and water management (12%). One of the barriers is the complexity of the water eco-system that does not facilitate the integration of new technologies to re-use water and to transform waste to energy. Mia Javier calls for a smarter water framework and simpler water landscape. Is smart water the answer to the water conundrum?
Americans love innovation, particularly if they are venture capitalists . Kleiner Perkins Caufield Byers claim to be able to "see around corners" and anticipate the "next big thing". They must risk real-world capital on often untested ideas that fuels innovation.
Solazyme, the algal biofuels company, has been a great success story for its VC investors, which include VantagePoint Capital Partners, Braemer Energy Ventures and Lightspeed Venture Partners. The company received early investment from The Roda Group.
Sheeraz Haji is one of those well traveled executives. His firm handshake and confident demeanor transpire a multi-cultural background that puts you at ease in an instant. We first met in the corridors of the Hyatt in San Francisco during the last Cleantech Forum, and chatted about the latest industry trends.
It does not take too long in our conversation before Sheeraz starts quoting numbers. “The investment dollars are up but the number of deals has dipped a bit from last quarter. This translates into much higher deal sizes with a a strong bias towards later-stage deals. Actually, they accounted for 93% of all invested capital” he explains me in the debrief call following the webinar on the recent first quarter results. His quick analytical mind allows him to make numbers speak and divulge hints on where the cleantech industry is heading. “The IPO market is slowing down from the end of 2010 but venture backed returns are looking good” Sheeraz reveals with data points on Amyris and Solarzyme. “M&A is also heating up with Danisco’s acquisition by Dupont for $6.3Bn”.
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