Overshooting Stage

The volume of the VC market dropped drastically after Q4/2008. In 2009 the VCs invested only $ 53 billion in 7,279 deals. Within the cleantech category less than half of the prior year's total - $ 5.2 billion was invested in 598 deals. At this level, the average deal size plummeted by more than 60% compared to the peak year 2007. Nevertheless media attention for cleantech reached its peak in 2009 with a share of 17.4%. However, largely due to press regarding bankruptcies of cleantech firms and the failure of stimulus programs like the DOE-LGP.

In late 2008 and early 2009 media use of the term Cleantech reached its peak. 21% of all articles of the cleantech frame mention that specific topic. Further dominant topics in media are Other RE and Solar with 18 and 17% of the attention. For the first time the topic Smart Grid gains some relevant attention and reaches 3% of media discourse. This announces the change towards less asset heavy investment categories within the cleantech category. The transportation topic which has some more attention as well is supporting this trend but has some link to the stimulus packages for large VC financed companies like Tesla Motors or Fisker Automotive.

The burst of the US housing bubble and the loss of trust in many financial institutions led to the beginning of a global recession. The confidence in the markets had to be supported by heavy government actions to save the financial system, especially US banks and insurance companies. On September 15, 2008, the bankruptcy of Lehman Brothers was announced and the financial crisis became apparent. This recession hit the VC markets as well.

Governments around the world introduced stimulus programs to support recovery most often with a focus on green growth, examples include the ARPA-E in the USA and the Green New Deal Package in Korea (UNEP, 2009). These initiatives strengthened the cleantech category. Concurrently, policymakers started several initiatives to "de-risk" capital markets through new regulation like Basel ะจ or Solvency II[1]. Over time these policies decreased allocations towards riskier assets like cleantech VC.

  • [1] Basel III and Solvency II are comprehensive reform measures to strengthen the regulation,supervision and risk management of banks or respectively insurance companies. Core initiativesinclude increasing capital & liquidity requirements and higher risk discipline in investments.
 
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