Only 18% of clean technology executives and investors think the federal government will play a larger role in funding cleantech innovation in the future, according to a survey conducted by Cooley LLP. A total of 40% believe the federal government will play a smaller role, and the remainder (42%) believe it will remain relatively unchanged.
An overwhelming majority (74%) of respondents, which included investors, entrepreneurs and other thought leaders, believe that both interest and investment in cleantech will increase over the next five years.
However, an even higher number (79%) see significant challenges that may keep their companies or investments from achieving desired near-term to midterm growth and profitability, according to the survey, which included 128 respondents.
The top challenges cited by U.S. clean energy and technology company leaders include access to capital (79%) and weak economic conditions (63%), followed by the need for stronger public policy and incentives (39%) supporting the U.S.' position as a global cleantech leader.
The foremost factor named as critical to driving new cleantech investment is the need for an increase in high-value exits, such as initial public offerings, and mergers and acquisitions (35%).
This was, by far, the major factor for investors (62%). Entrepreneurs voiced their number-one potential driver as an increase in oil and gas prices (29%), which would enhance the value of cleaner and more energy efficient products, followed closely by a new round of high-value cleantech company exits (27%), and major technological breakthroughs (25%).
‘At this point, [venture capitalists] and other investors have put a lot of money to work in cleantech and are still waiting for those investments to mature as exits to enable them to fund the next generation of cleantech innovation,’ says Cooley partner Gordon Ho. ‘In the near term, however, the slow economy and uncertainty around government support makes selling products and raising capital particularly challenging.
‘That said, the funding landscape is evolving, with existing and new sources of money available,’ he adds. ‘The questions are how much and for which deals.’
Favored selected investment opportunities included solar and smart grid infrastructure (both 26%), although these segments trailed energy efficiency and other cleantech sectors.
The survey also found that 73% of respondents believe that for the U.S. to remain competitive in cleantech, the federal government needs to provide more tax credits and incentives and increase energy-related legislative mandates (cap/trade).
Investors, executives and entrepreneurs surveyed saw the clean technology and renewable energy sector playing at least a moderate (57%) or significant (25%) role in U.S. job creation over the next five years, and a more significant role (64%) in the next 10 years.