Editor’s note: Bill Warner writes “The Angel Connection” which is a regular feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share advice for entrepreneurs seeking angel investors and/or venture capital investment. He is chairman of the Triangle Accredited Forum angel investor network with over 100 members throughout the Southeast.
RESEARCH TRIANGLE PARK, N.C. – Talk about major shifts in investor interest, cleantech is getting an incredible amount of attention from global venture capital firms according to the by Deloitte. They are perhaps hoping for attractive incentives from government initiatives as global warming programs kick in throughout the world.
Cleantech is hot
Just five years ago this annual survey indicated some interest in clean technologies and the life sciences. This year, regardless of fund size, there is tremendous interest from VCs in both of these sectors, especially clean technologies, where more than six out of 10 respondents anticipate their investment levels to increase and another three out of 10 will hold their investments at the same level.
Among U.S., UK and Israeli investors, about half expect to increase their investments in cleantech, while about seven out of 10 AP respondents and European respondents expect their cleantech investments to increase. Two-thirds of respondents from the Americas plan to increase their cleantech investments. This interest could be because they are seeing an increase in government/political support for cleantech and VCs are looking more to government participation in both investments and incentives.
Other investment sectors are mixed
Semiconductors and electronics could suffer a 50 percent reduction in investments, while medical devices may see a nice 37 percent increase. Telecommunications could achieve an underwhelming 15 percent increase and 29 percent decrease. Software, new media, social networking, biopharmaceuticals and consumer businesses will hover around 25 percent increases with similar decreases, while more than half will keep their investment levels the same.
Weathering the storm
Keep in mind that this is all in the context of a worldwide economic recession. In general, VCs are decreasing their overall investing dollars, focusing on their best companies and increasing their allocation to later-stage investments.
Lower valuations could present opportunities for VCs looking for a good deal. It is too soon to say that they will take them. Larger firms may experience a bigger slowdown than the smaller firms. Just more than half of respondents from firms managing $500 million or more are decreasing their level of investment, compared to about one in three of those managing $99 million or less.
About the author: Bill Warner is the Managing Partner of , a business consulting firm in the Research Triangle Park area of central North Carolina, and is the chairman of the , an angel investor network with over one hundred members throughout the southeast.