VCs make 87% on European cleantech plays

London, 12 October: Venture capitalists (VCs) investing in clean technology firms in Europe have made an average annual return of 86.7% on their investments since 1999.

A report, commissioned by the European Energy Venture Fair, looked at a sample of 57 companies, who have attracted funding from 19 VC investors since 1999. The companies received €130.8 million in funding from venture capitalists and a further €449 million in follow-on funding from public stock markets.

So far, five of the 57 companies have completed an initial public offering, and three have been sold to a trade buyer, with these deals making an average annualised return of 476% for their investors.

Nine more of the companies included in the study had undergone a second round of VC investment, generating an average annual return of 14.9% on paper, the report says.

Of the rest of the sample, six firms had been liquidated, losing most of the money invested, and 34 had not undergone any significant further rounds of investment. These were valued by New Energy Finance, the London-based information provider which carried out the study, at the same level as at the initial investment.

Even Bakke, managing director of Bankinvest New Energy Solutions, a specialist fund managed by the Danish Bankinvest group, and chair of the steering committee which oversaw the study, said: "What this study shows is that, by applying proper venture capital discipline, you can get good returns from a decent proportion of your investments, and a quite spectacular return from the real winners. In other words it is a typical, but attractive, venture capital sector."

Gina Domanig, head of private equity at Sustainable Asset Management based in Zurich, added: "We have always been confident that good returns can be achieved by investing in European clean energy technology companies, and this study proves it."

The sample represents 30% of all clean tech companies in Europe which have received VC funding, according to New Energy Finance.