While all venture capital sectors suffered during the Great Recession, one notable sector was almost completely left out of the corresponding recovery: Cleantech.
It certainly didn’t help the sector that many of the major institutional investors who had very publicly backed the Green Wave of allocations to venture firms (circa 2004-2007) had been very disappointed with the financial results. Perhaps the most visible such disappointed investor was CalPERS, whose Chief Investment Officer Joe Dears declared in 2013 that their allocations to cleantech venture capital funds had been a “noble way to lose money”.
It should be noted that CalPERS’ results with cleantech venture capital during that period have always trailed what available benchmarks suggested was actually an overall small net positive gross return across the sector. But regardless, even an “overall small net positive return” is in no way what any institutional investor is looking for when allocating capital to a venture capital fund, regardless of sector. And so institutional investor allocations to cleantech languished even while venture capital allocations overall grew to record levels. The “cleantech” moniker completely fell out of favor, at least among most mainstream VCs and institutional investors.
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