Early-Stage Venture Capital for Energy Innovation

Early-Stage Venture Capital for Energy Innovation
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Edition: 2017
30 pages

Between USD 1 billion and USD 4 billion of energy-related early-stage venture capital (VC) deals are made every year. Though small relative to the size of total investment in the energy sector, these investment flows provide valuable information about which technologies are favoured by investors and which ones could make their mark in coming years. These deals also have implications for government policy whose goal is  to help make sure that public and private innovation is delivering the technologies needed to meet energy-system objectives.

Using econometric analysis of a dataset of transactions involving over 2 000 energy-related startups, we can show which technologies are well-supported and who are the investors who do so. Current trends show strengths and the weakness of early-stage VC for fuelling the innovation needed to modernise the energy system and meet collective goals, such as energy access for the world’s poorest people and climate-change mitigation. Better technologies, in the form of hardware, will be critical to improving performance and bringing down costs.