USGBC-CF

Green Technology Bubble is not Going Away

February 05, 2010

Venture Capitalist Bullish on Green Startups

SAN FRANCISCO (Reuters) – The U.S. recession and slow global economy have created big opportunities for investments in promising green startups, an area that at one time had lofty valuations, Silicon Valley venture capitalist Steve Westly said.

Westly, a former California state controller and eBay Inc executive, said he is seeing some “great quality of deals.”

“Two years ago when we were investing, there was huge competition and people had bid the market higher,” Westly said in an interview this week. “Because of the recession, we think entrepreneurs’ expectations have moved back to reality.”

He said: “It’s a terrible time to raise money, but we think this is a great buying opportunity.”

Westly, founder of Menlo Park, California-based Westly Group, is currently in the process of assessing business plans of green startups.

Westly Group closed its second fund, exceeding $127 million, in December and has already invested about half of that money in diverse green technology companies, including light emitting diode (LED) fixtures startup Lunera, solar cell maker Solexel and smart grid company Eka Systems.

The fund’s investors include pension funds, strategic investors and high net worth families, with the principles committing over 20 percent of the capital of the fund.

Westly is especially excited about the potential of California startup Lunera, which makes ultra-thin LED lighting units for offices.

The commercial market for LED lights is huge, he said, adding that Lunera is growing rapidly.

Looking forward, Westly said he expects many more investors to come into the green space in 2010.

Green technology “is not a bubble and is not going away,” he said. “It has the potential to become one of the largest sectors.”

“The only thing that held the industry back is a lack of IPOs,” he added.

Source: http://www.reuters.com/article/idUSTRE60R5VV20100128