"If you are casually interested [in cleantech], you shouldn't dip your toe in the water," Foundation Capital's Steve Vassallo said to the crowd at the Harvard Business School's energy symposium.
The daylong agenda brought clean energy and technology investors together to speak candidly about the challenges the sector faces, and how the current moment is a mix of boomtime and depression.
"People always think that we are at the bottom when we are still on the way to the bottom," said HBS professor Joe Lassiter. "It is like when kids get into the car and ask, 'are we there yet?' 10 minutes after the car starts."
"Your resolve and commitment to cleantech will be tested in the next three to five years," Vassallo added. "We are going to be walking through the desert.... Look deep down and see whether you really believe, because it is not going to be easy."
Nor is it ever easy. Lassiter estimated that the cost of training a new partner in a venture capital firm is about $100 million in deals. In cleantech, building a portfolio of experience has generally be negative, much to the chagrin of limited partners.
"There are a lot of people who made bad bets. They just sucked as investors," said General Catalyst's Bilal Zuberi.
Some of the challenges are due to the fact that investing in cleantech is a longer, and more risky, prospect than investing in IT.
"The general limited partner base, looking at venture as an asset class, is asking themselves, how patient do we need to be? When you say long term, do you mean 10 years or 30 years?" Vassallo asked. "There is a risk that cleantech investments become a victim of the short term-ism of our entire investor base."
Changing Strategies, Changing Opportunities
"The regulatory [climate] is what it is and folks are trying to innovate outside regulatory constraints. You are seeing a much broader definition of cleantech," said Jim Matheson of Flagship Ventures. "It is a long-term game."
As the rules of the game have changed, so have player strategies.