Cash Comes to Cleantech

Google is one of the players investing in clean technology.

Image: Google

Peter Thiel and other critics of cleantech investing have to be shaking their heads.

Not only did Vinod Khosla, famous for his commitment to investing in renewable energy, raise one of the largest venture funds of 2011 in part to invest in cleantech, it looks like still more money is going toward the field.

Flagship Ventures of Cambridge, Massachusetts, has pulled together a new $270 million fund to invest in healthcare and cleantech. And Sunnyvale, California, solar firm AQT Solar has raised $18.7 million of a planned $22 million funding round.

The argument put forward by Thiel, a PayPal founder and now investor, and others against such investing is that cleantech companies are too dependent on government policy to be good bets for investors. Also, critics have argued, cleantech and biotech companies both tend to take a lot of money and time to mature into businesses with a chance to go public or be bought.

But Flagship managing partner Noubar Afeyan told Scott Kirshner of the Boston Globe that there’s still money to be made investing in renewable energy, for instance. It just takes more patience than investing in the latest technology fad.

"I don't think the level of activity has gone down,” he said. “I think that the level of noise has gone down. There was a time in cleantech when people were just spraying money around indiscriminately. What we've seen is that cleantech has turned out to be more like biotech. You need patient, flexible execution to generate reasonable companies."