Clean energy stocks may not be performing well in the public market, but there is a growing appetite for companies focused on decarbonization in private markets. Clean Energy Ventures recently announced the successful raise of $305 million for its second fund, surpassing the initial target of $200 million. The oversubscription of the fund was driven by interest from key limited partners including The Grantham Foundation, Builders Vision, and Carbon Equity. This influx of capital highlights a strong belief in the potential for clean energy investments in the private sector.
Clean Energy Ventures is taking a strategic approach with its new fund, looking beyond traditional green investments like solar and wind. Co-founder and managing partner, Daniel Goldman, emphasized the importance of industrial decarbonization, particularly in sectors like cement and steel production. The firm sees significant opportunities in developing emissions-reducing technologies for these industries, where innovation has been lacking for decades. In addition to industrial decarbonization, the fund is interested in advancing technologies for plastics, such as more efficient recycling and cost-competitive bioplastic production, as well as grid-improving technologies for distributed energy.
Clean Energy Ventures backed 20 companies in its first fund and has already made six investments through its second fund. These investments include green ammonia company Nitrofix based in Israel and sustainable aviation fuel company Oxccu in the U.K. The firm is also expanding its presence by opening a new office in London, recognizing the significant opportunities in the European market. Despite the challenges posed by the Covid-19 pandemic, Clean Energy Ventures remains optimistic about the future of clean energy investing.
Since the launch of Clean Energy Ventures’ first fund in 2019, the renewable energy landscape has evolved dramatically. The rise and subsequent fall of special purpose acquisition companies (SPACs) have reshaped the public market landscape for clean energy companies. While some argue that the hype around SPACs led to premature public listings and underperformance, Clean Energy Ventures remains focused on private market opportunities. The firm believes that investor perception around clean energy investing and the potential for strong returns are still intact, despite recent market fluctuations.
Clean Energy Ventures takes a strategic approach to exits, viewing IPOs as a “nice to have” rather than a “need to have.” The firm focuses on strategic sales, backing companies with technologies that are attractive to larger industry players. While none of the companies from the first fund have gone public or been acquired, there has been interest from potential buyers. Clean Energy Ventures aims to position its portfolio companies for successful exits, whether through IPOs or strategic acquisitions.
Private equity is playing an increasingly important role in energy transition deals, providing a valuable bridge for companies that have outgrown venture capital but are not yet ready for public markets. According to financial advisory firm Weaver, private equity-backed energy transition deals have surged to over $25.9 billion in 2023, up from just $500 million in 2018. Clean Energy Ventures leverages its partnerships with private equity firms to help portfolio companies transition to the next stage of growth. The firm has seen a growing interest from private equity investors in recent months, signaling the broader trend of private markets driving clean energy investments.