Clean Tech Startups Will Make Big Money And See More Failures Too


Clean-tech investors profess a perennial optimism for the potential of their companies. But a dark reality clouds their sanguine outlook: few of their companies have scored big wins in the IPO and M&A markets.

This uncertain exit environment was a factor in this year’s swooning spending. Investments in clean-tech startups fell 70 percent in the recently completed second quarter.

But Vinod Khosla says confidence in clean tech will be rewarded - handsome returns will come with patience. So too will a greater failure rate than VC typically see with their companies.

“More money will be made in clean technology than traditional areas” of venture investing in Silicon Valley, said Khosla on Thursday at the Always On Summit at Stanford University.

Such an outlook might be expected from this head of Khosla Ventures, a firm specializing in clean tech with as many as 60 portfolio investments.

But Khosla is quick to admit the business “will see a higher percentage of failures” even if “the wins will be larger” than normal, too.

With respect to industry sectors, Khosla said he believes lithium battery investments are "over hyped." It is possible lithium batteries could be replaced by something better, he said.

If not, companies innovating in the market will do fine, he adds, noting that Khosla Ventures has invested in some of them.