A leading Silicon Valley venture capitalist said last week that the US was handing China the opportunity of becoming the leading economy in the world if it loses the “clean tech war”.
“For approximately 2,000 years, China was the preeminent culture, economy and military force in the world,” Claremont Creek managing director Nat Goldhaber said. “The realization is incredibly simple: they want to get back there again.”
Goldhaber compared the example of BrightSource’s Ivanpah project in the Mojave desert, which had been stalled by environmental concerns over a endangered species of tortoise, with China’s 3 Gorges Dam project which saw 1.4 million people relocated.
He told delegates at the Always On Going Green conference in San Francisco: “I have to ask, are we really serious about energy? I would posit at least that we’re not very serious about energy, certainly not compared with the Chinese.”
The Chinese government had grasped the consequences of losing 5.8% of its GNP as a result of the dirty air caused by its manufacturing industry and had made measures to address this issue in the country’s 12th 5-year plan. The huge disparity between investments made in China and the US would cost the American economy, he said.
“Are they going to clean our clock? It’s hard to say. They are going without any question going to clean our clock on the manufacturing side.”
Innovation Without Victory
Although as a “fiercely creative nation” the US would continue to dominate innovation, China could be the ultimate winner.
“We [in the US] get to live in solar powered homes with relatively clean skies using inexpensive solar collectors built by the Chinese, in many instances using our invented technology. They, on the other hand, get to make [panels] for us. Not only that but they loan us the money to buy it.
“So, who is the winner in the clean tech war or is there a war at all? Is this a opportunity for real long term cooperation if China achieves its objectives of being the number 1 economy in the world and we are an active participant in assisting in continuing to supply what we do so well – great inventiveness and pumping it into their manufacturing model.”
He urged the government to make it easier for talented PhD overseas students at American universities to work in the US, to relax permitting for clean energy project and cut capital gains tax for companies to stimulate reinvestment.
Bullish On Emerging
Earlier in the day, clean tech investors agreed that emerging markets such as China and India were an exciting prospect for clean tech investors.
“Government support for tariff regimes for capital expenditures are very good in these countries and the entrepreneurs are of the highest quality,” Anup Jacob, founding partner at Virgin Green Fund, said. “We’re very bullish on the investment in those markets. That might be a good road to hope for.”
Meanwhile, prospects for clean tech companies in those emerging markets were promising, said Stephen Eichenlaub, managing director at Intel Capital.
“I would encourage emerging market entrepreneurs to appreciate that the IPO market is going to be closed for a long time and they should be building their business around a potential M&A for a local market which will attract the attention of bigger similar players overseas.”
For more on IPOs and investment trends in the clean tech space, read: Clean Tech Paying A High Price For Volatility.
Jacob said that despite a dramatic decline in valuations, particularly in the clean tech sector, he saw a “prefect trifecta” for investors.
“We’ve been investors in this space for over a decade. And I don’t think we’ve seen a better time for investing. If you look at just the solar space for example 16G W are being deployed this year, 20 GW next year, the total market out there being over $100 billion in revenue.
The Perfect Investment Trifecta
“Fundamentally, there’s such an upwind in growth that we are becoming incredibly competitive across the value chain. From a private equity perspective we’re seeing valuations being lower, we’re seeing growth continuing to be high and we’re seeing lack of conviction in capital markets it’s the perfect trifecta for us to be good investors.”
Stuart Bernstein, head of the clean tech practice at Goldman Sachs, also offered an optimistic view of the current clean tech market, comparing it with the mid-1990s doldrums in the tech industry. Companies such as Dell, Netflix and Tesla had all survived financial crises and were now valued much higher.
“Life is but a sine wave, but where are we in the cycle? There are opportunities throughout the sine wave.”
“I use the analogy of the tech space – I think we’re at 1992. Remember what followed the internet in 3-4 years,” he said. “We’ll look back at this period as a blip.”