Clean & Green
Is Piper Jaffray’s new CleanTech fund the start of something big?
BY PHIL BOLSTA
When a growing number of Piper Jaffray’s institutional investors began clamoring for clean and green investment options, the investment bank listened. The result? The $62.5 million CleanTech Fund, more than 80 percent of which is committed to venture capitalists and private-equity groups with environmentally conscious portfolios. After seven years of analyzing energy and cleantech businesses, Piper Jaffray has emerged as something of an authority in this emerging field.
Cleantech, short for “clean technologies,” describes products or services that improve performance or efficiency while lowering cost, energy consumption, or waste. That focus includes energy efficiency, water purification, solar energy, and non-toxic materials. As awareness grows of industry’s negative impact on the environment, largely from the burning of fossil fuels, so too grows interest in clean forms of energy generation. According to the Cleantech Venture Network in Ann Arbor , Mich., investments in alternative energy sources are projected to pass $6 billion by 2009. Some observers feel that clean technology is, yes, the next big thing. No less an authority than Bill Joy, the founder of Sun Microsystems, has opined that the realm will be “bigger than the Internet.”
One upshot: The more that cleantech investment is recognized as a smart business decision, the more mainstream it becomes. Exhibit A is the demand for Piper’s new fund, which was originally designed to raise just $25 million; after a flurry of inquiries, the fund more than doubled and investors late to the party walked away empty handed. (Note: Piper was unable to comment on this article as the company is in the midst of a SEC-mandated Quiet Period.) While Piper’s fund is diversified among environmentally friendly sectors, ethanol and other biofuels are underrepresented because that was one of the first green spaces to become popular with investors; hence, there’s less room on the upside for profit.
According to the Cleantech Venture Network, some green Minnesota companies are becoming even greener, as in the color of money. Over the last two years, Minnesota businesses have received more than $25 million in cleantech venture capital funding.
While the cleantech train keeps chugging along (on alternative fuels, of course), and more and more investors join the hunt, there is cause for concern, however. As more investment dollars are directed into the cleantech sector, demand may outstrip supply.
That’s a worry for another day. Today? No worries. Piper, in fact, is planning a second cleantech fund to take advantage of the growing demand for clean, green investments.