Venture Capitalists See Resurgence in Investment Levels This Year, With a Clear Focus on Greentech Sector: KPMG Study With energy prices down from peak highs, greentech investment trending into energy storage and efficiency, away from renewables, as investors seek to maximize return
NEW YORK, March 4 /PRNewswire/ -- Coming off a year that saw severely diminished venture investment and deal volume in 2009, the venture capital community appears optimistic that a rebound will occur this year, with a prominent focus on the greentech sector, according to a recent survey by the U.S. audit, tax and advisory firm KPMG LLP.
In polling 200 venture capitalists, investors, entrepreneurs and bankers, KPMG found that 67 percent of respondents indicated that they expect venture capital investment to increase in 2010 compared to 2009 – a drastic shift from the 2009 KPMG survey when only 23 percent predicted an increase. Only seven percent see a decline in investment levels coming for 2010 compared to last year when more than half (56 %) predicted a year-to-year drop.
And while greentech investment declined more than 50 percent in 2009 versus prior year, the 2010 KPMG survey indicates that the greentech sector will be more attractive to investors this year. In fact, 77 percent of those surveyed say venture investment in green technology will increase in 2010 compared to 2009, including 15 percent who project investment to jump by more than 20 percent.
"There is no doubt that the greentech sector remains an attractive investment area, but the difficult economic environment had investors operating in a cautious fashion in 2009," said Brian Hughes, KPMG partner based in Philadelphia and co-leader of its venture capital practice. "Our 2010 data shows that investors are more bullish in their investment projections, and with all the federal funding and programs, the greentech sector will undoubtedly benefit from the improving investment environment."
When asked which sub-sectors of greentech would receive the most investment over the next two years, the responses indicate that venture investment is shifting more toward energy storage and efficiency and slightly away from renewables. In fact, 38 percent of respondents say the energy storage and efficiency sector will see the most investment – up from 33 percent in the 2009 survey. Meanwhile, 30 percent expect renewable energy to lead investment - a drop of six percentage points compared to last year's survey.
"We have certainly seen an increase in venture funding directed toward storage and efficiency, as investors look to maximize their returns on energy that is already here," said Packy Kelly, KPMG partner based in Silicon Valley and co-leader of its venture capital practice. "But renewables will also command attention, given the government's emphasis on these technologies that are advancing rapidly."
With regard to where greentech investment will be spread geographically in the United States, the West will dominate, but the Northeast and Southwest are expected to see significant funding. Outside the U.S., venture capitalists expect greentech investment to be focused primarily in Asia, with Europe second.
In addition to the expected increase in venture investment for 2010, respondents in the KPMG survey agreed that the government will play an increased role in greentech activity. In fact, 65 percent of those surveyed anticipate an increase of federal funding for greentech initiatives, and 92 percent expect more public/private partnerships to initiate "green" projects.
KPMG conducted the survey in conjunction with AlwaysOn, the venture capital new media organization, in advance of the GoingGreen East conference taking place in Boston on March 8-10.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (http://www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 140,000 professionals, including more than 7,900 partners, in 146 countries.
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SOURCE KPMG LLP