Tuesday, May 15, 2007

Cleantech bubbles on

Couple of weeks late on this one, but the Guardian only picked it up yesterday - further warnings about a developing cleantech investment bubble:
According to Lux Research, which has just completed a comprehensive report on the sector, "the warning signs of a bubble are flashing in the energy technology segment, where initial public offering values and venture capital deployments more than doubled last year – setting the stage for a boom and bust".
Lux reported around 930 startups in global solar energy and biofuels arena and that some 200 of them have received some venture capital money[...]
Says Michael Holman, a senior analyst at Lux: "I think from looking at the sheer amount of money that is being invested right now we have to think that a lot of that money is now chasing after some opportunities it wouldn't be in a more sober climate."
Later stage institutional investors have also been caught up in the hype. Lux reported that in the energy segment where IPO value rose from $1.6bn in 2005 to $4.1bn in 2006.

Lux press release here, and further info here.

As I mentioned below, I'll shortly be working on a dissertation examining share price characteristics in the UK listed cleantech sector. The worry isn't that the companies winning too much investment are actually crap, as was the case in the dotcom bubble, but that when the bubble bursts, some decent companies developing much-needed technologies will be taken down with it. The costs of the bubble bursting will be high - what it needs is just to have a some (clean) air taking out of it.

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