Clean technology industry or become a new hot spot in the capital market

Capital "smell gold" clean technology survey

Where is the next flashpoint?

Editor's note

Every once in a while, people will look for a specific industry. It does not necessarily have the highest profits or the fastest returns in the capital market, but it certainly has an admirable aspect: the market in which it appears seems to be stretched. The situation of the future is excellent.

These industries are always fortunate enough to be extravagant: once enough enthusiasm is obtained, the rapidly expanding market may push it to a flat development track. In the tide of market economy in China for more than 30 years, the industries that have won such "fluo" have gone through several changes. But at the moment, compliance with this standard may be accompanied by climate change and energy-saving emission reduction emerged as the clean technology industry.

What is the direction of capital "smell gold" cleaning technology? Optimistic about market space or technical advantages? Can wind power and solar energy attract more feasts? Where is the next stop for capital? Is it a trend to shift from pure alternative energy development to cleaner technology applications?

Recently, our reporter interviewed 8 private equity ** respectively, they are: Ventech China, Vantage Point Venture Partners (hereinafter referred to as VPVP), Lenovo Investment, Yuanji Environmental Protection Capital, Zhuoran Capital, Aurora Capital Partners, and Detong Capital And Qingyun Venture Capital (in no particular order). Try to give a panoramic view of the above problem.

According to data provided by the BCC Research Corporation of the United States, in 2007, the market value of U.S. clean technology was 54.2 billion U.S. dollars, and it increased to 57.8 billion U.S. dollars in 2008, and it is expected to reach 88.6 billion U.S. dollars in 2013, with a compound annual growth rate of 8.9%.

Liu Xiaoyu, chief representative of China Cleantech Industry Investment Group in China, disclosed to the reporter that the investment in global clean investment in the second quarter of 2010 was US$2.1 billion, of which China was only US$30 million.

From a single point of view, China’s clean technology market is “loose”. However, for the sleek private equity market, competition in this market is already a “hot day”.

According to statistics from China Venture Capital Association, clean technology has become the industry with the highest degree of interest in venture capital in 15 industries in 2009, with a ratio of 78.9%.

In the interview, the reporter learned that clean technology has become an indispensable focus on the actual amount of investment and investment projects in the near future, and it has firmly entrenched the sensitive nerves of all investors.

It is foreseeable that, with the development strategy of low-carbon economy rising to the national level, Chinese companies engaged in the field of clean technology will surely become the "darlings" of capital market competition globally. For VC&PE, which is a goldsmith, it is naturally impossible to miss such a global wealth feast.

Markets, technologies, policies, and management teams basically outline the original driving force behind all private equity hunters. Once a project with all of the above elements is in place, it is inevitable that many private equity funds will become involved. However, in actual practice, because each family's tendency towards the above four factors is different, the final investment direction may be very different.

Market first

There is an essential difference between investing in clean technology and IT: IT has its own innovative technology and will create a market after it has been widely promoted. The investment in clean technology is that sewage, garbage and air pollution already exist, and the region is very strong. This is an inhaled market and must be preceded by problems (commercial opportunities).

In fact, after the Copenhagen Climate Change Conference, the concept of “Green Gold” became a hot topic.

For Chen Jiaqiang, chief executive officer and managing director of Yuanji Environmental Protection Capital, although there may not be such a conceptual definition, the secret of “from green to gold” is already clear to the chest.

Prior to the establishment of the Yuan-based environmental protection capital, Chen Jiaqiang had worked at CLP Power Hong Kong. As early as 2003, he began to contact the new energy sector, especially the investment in the wind power industry.

“A lot of people think that we are doing public relations.” Chen Jiaqiang said frankly that because at the time the cost of developing wind power was high and there was no policy preference, “Now everyone knows that new energy is profitable, but today it has only come to pay attention to this industry. Who to vote for."

According to a report from the U.S. Cleantech Industry Investment Group, investment in venture capital in the cleantech field hit a record high in the first half of this year, reaching US$4.06 billion, which is already higher than the historical high of US$4.04 billion in the first half of 2008.

This "historical new high" may still only be a beginning. Earlier, the executive meeting of the State Council had decided that by 2020, China's per unit GDP of carbon dioxide emissions fell by 40%-45% compared with 2005; non-fossil energy accounted for about 15% of primary energy consumption.

The more popular and exciting statement is that the newly prepared "New Energy Industry Development Plan" was proposed on July 20. From 2011 to 2020, China will accumulatively increase direct investment in new energy industries by 5 trillion yuan, including nuclear energy and wind energy. , solar energy, biomass, etc.

However, in spite of the government's favorable policies, VC&PEs with countless successful experiences in the face of clean technology investment projects do not feel that it is easier to make new decisions.

In fact, many interviewees told reporters that the high threshold for nuclear power, the declining investment in wind power, the lack of solar core technology, and the high cost of biomass energy. In contrast, some clean technologies focusing on energy conservation and emission reduction receive more attention.

“Venture companies often hope that companies have a clear market and customers, and technology may be ranked second. If there are technical barriers, it would be better,” said one person familiar with private equity investment.

In this regard, Qingyun Ventures, which focuses on clean technology venture capital, expressed similar opinions.

Nine years ago, Ye Dong, the founder and president of Qingyun Ventures, chose the unpopular environmental industry and focused on investing in venture capital in the world.

However, Ye Dong soon discovered that there is an essential difference between investing in clean technology and investing in IT: IT attaches importance to technology, and with its own innovative technology, it will create a market after it is widely promoted; while the investment in clean technology is waste water, garbage, Air pollution already exists and the region is very strong. This is an inhaled market. It must be led by problems (commercial opportunities) and find solutions that can solve the problems in the near future. Whether the technology is advanced or not, it is from China or the United States. Therefore, in the direction of investment, he needs to pay more attention to the in-depth study of the industry than to simply follow the trends in foreign countries.

Zhang Lihui, partner of Qingyun Venture Capital, explained to this reporter that “Clean-tech is a topic that can be measured in the period of 10-20 years. For now, technology is not the sole focus of China Clean-tech.”

He believes that China and the United States have different backgrounds. China's current Clean-tech development is still in its infancy. At the present stage, clean technology is implemented in China, not only to develop high-tech, high-tech new energy, but also to pay more attention to improving the energy efficiency of the stock market.

"If you increase the current utilization efficiency of coal, water and other resource products by one percentage point, the value may be much greater than the cost of developing thousands of dollars to develop a world-class new energy technology." Zhang Lihui said.

On Qingyun Venture's website, the reporter learned that the 25 companies it has invested in are divided into six areas: energy efficiency, environmental protection, new materials, clean energy, sustainable agriculture, and sustainable transportation.

Zhang Lihui said that clean energy is only part of Qingyun's many cleantech investment areas. In contrast, they are more willing to focus on the transformation of the resource stock market. For example, in the field of low-voltage power transmission, "in many areas, loss of up to 20%-30% of 11-kilovolt transmission lines means that 30% of power is lost for every 1 kW of electricity transferred, and reducing such losses is of greater significance to China."

However, referring to IGCC (Integrated Gasification Combined Cycle Power Generation System), which is also aimed at the stock market, the above-mentioned individuals familiar with private equity investment believe that “similar to CCS (carbon dioxide capture and storage), IGCC has a market and certain Technology, but because there is no obvious policy tilt, we will not vote."

Technology Logic

According to Deng Feng, mass production is an integral part of technology, and because of China's advantages in production, China's production capacity has become one of the components of technology.

Which technology and market is more important? It seems that this is a puzzling proposition of "fish and **". It may be possible to have both, but the reality is often counterproductive. Which side of the scale you prefer will determine its direction to the direction of the Green Gold Road.

Previously, Northern Lights Venture Capital has always been known as a preferred technology-based company. Enterprises that focus on technological innovation in the green industry are often favored by the Northern Lights.

In the eight private equity ** interviewed by this reporter, it is still unfair to favor "technology as the king." Such disagreements can seem to be explained by differences in strategic orientation and professional training, leading to different logical thinking modes for market schools and technical schools.

Deng Feng, Managing Director of Aurora Capital Partners, said in an interview with this reporter: “I don't think that investing in China should be market-based and technically complementary.” He explained, “Clean technology and IT are different. After the technology comes out of the laboratory, it must be mass-produced, otherwise it cannot be regarded as a whole technology."

According to Deng Feng, mass production is an integral part of technology, and because of China's advantages in production, China's production capacity has become one of the components of technology.

In March of this year, the leaders of the Northern Lights, Sequoia Capital, Defengjie, and Detong jointly participated and provided Prudent Energy with a $22 million investment. With the investment of 10 million U.S. dollars from well-known organizations such as Jifu Asia, Mitsui Ventures, and China-Europe Capital, Pruen officially completed the third round of up to 32 million U.S. dollars.

Pu Neng focuses on the research and development and commercial application of vanadium batteries, a new type of large-capacity energy storage products. Since January 2009, when Pu Neng spent less than 2.15 million US dollars and purchased VRB Power, the world’s vanadium battery company, at a low price, it became the star of the electrochemical energy storage industry.

Deng Feng, who has invested in energy storage technology, Deng Feng once said in an interview with this reporter, “Pengeng is still technically immature, so we feel the potential for long-term development. Energy storage products today There are markets, but there are still some technical challenges and difficulties, which is actually our investment opportunities."

“Any clean technology that wants to win, innovation ability is very important.” Deng Feng believes that the upgrading of clean technology is actually very fast, unlike some industries relying on customer base alone, it has a competitive barrier.

In this regard, the German capital partner Shao Jun is very much in agreement, he explained to reporters that the clean technology is the point of the "technology." "Technology can increase efficiency and reduce costs. Moore's Law also applies in this area."

Anyone familiar with venture capital knows that Shao Jun was famous in the industry for investing in Wuxi Suntech, but he was still at Longke Venture Capital.

Shao Jun said in an interview with reporters that solar technology is very important, but companies that are competing with others are no longer in his choice. He bluntly stated that he does not rule out the ability of individual enterprises to be strong in the cottages. If the technical barriers are not high enough, “there is no more than the first-mover advantage, and someone will soon reduce the cost even lower.”

After serving in Detong, Shao Jun chose SIERRA SOLAR POWER. This company, founded in January 2007 in Silicon Valley, USA, is dedicated to developing a next-generation thin-film solar cell solution that directly manufactures polysilicon solar cells on glass substrates to achieve high photoelectric conversion efficiency and low cost.

VPVP partner Li Feng also emphasized the importance of technology. He revealed that he is currently looking at two technologies: one that is similar to the fan technology of jet engines, and one that uses the thermoelectric effect of thermoelectricity, called Solid-state Solar Thermal Technology.

"These two technologies belong to the next generation of technology and have been studied for decades." But Li Feng believes that such technology will certainly be applied in scale, "it only takes a while."

There is also a background in foreign capital, Ventech China expressed the importance of technology from another perspective.

"For power battery and wind power, we conducted a survey of the entire industry chain and decided not to intervene in this field," said Guo Jia, a partner at Ventech China.

She believes: "In the case of a transparent global market and information flow, it is very important who the original technology is."

The view is that there are legal deficiencies in the participants of the Chinese market regarding the ownership of intellectual property in core competitive technology. Such as the innovation of new materials in the field of power batteries, the core motor technologies of wind power manufacturers, etc.

"The support for Clean-tech should not be predicated on sacrificing China's vast market. Ventech China hopes to help its own indigenous technology team in China," said Guo Jia.

Who is the next sucker?

Most institutional investors told reporters that solar energy and wind power are almost impossible to dominate in the next few years.

On June 28, a new survey released by Kyoto Tianhua Certified Public Accountants revealed that in the private equity investment field in 2009, the proportion of international venture capital flowing to the cleantech area was higher than all other areas, and the most attention was paid to it. The industries include solar energy, transportation and energy efficiency industries.

According to the survey entitled "International Business Survey Report," 34% of companies in the cleantech sector are optimistic about the economic prospects of their countries in 2010.

Therefore, 35% of companies in the cleantech sector hope to expand their workforce in 2010, which is 9% higher than the average of other industries. In addition, 42% of the enterprises in this field believe that they will achieve profit growth in 2010, second only to the financial industry.

However, judging from the situation of this reporter's understanding, each private equity ** is still harsh in the choice of investment projects, not all clean technology projects are optimistic about the venture capital market.

Richard Youngman, vice president of Global Investigations for the U.S. Cleantech Industry Investment Group, pointed out that the projects most funded by venture capital companies, such as Brightsource Energy, attracted $150 million in investment, basically Attract old faces of venture capital.

In addition, according to data provided by Zero2IPO Research, some industries still maintain a strong inertia in absorbing gold. In 2009, the new energy industry received a total of 448 million U.S. dollars in investment from equity institutions and 28 investment cases, of which 13 were solar energy, and wind energy was Followed by.

However, most institutional investors told reporters that these two industries are almost impossible to dominate in the next few years.

Wang Junfeng, the managing director of Legend Capital, expressed his cautious attitude towards investment in the photovoltaic and wind power industries. “The photovoltaic industry is mainly out of the market, which causes the business to be affected by European and American policies. Therefore, we will still look very cautiously in these industries. We will not do the simple and repetitive investment. We observed the wind power industry for a long time, but So far it has only invested in a wind turbine blade company."

“From an investment point of view, the pool is big enough to raise big fish, but the first round of investment in these industries has actually formed a barrier.” Chen Lihui, head of the investment consulting firm Hezhong Capital, analyzed because it is in complete competition. State, so it is not optimistic about capital.

Zhang Zhong, the founding partner of Smart Capital, told the reporter, “There are surprises in all industries and all aspects of the entire clean technology field. No one knows where the next flash point is, and everyone is looking for it.”

However, on the way to this flashpoint, private equity investors stressed that technology will not invest until at least the pilot phase. Even if they reach this stage, the VCs still have to give considerable patience.

“A large part of the investment in cleantech fields in the first half of this year was devoted to the new round of these old faces. These companies have once again attracted capital from venture capital markets, either because they are still unable to meet the conditions for public listing. It is impossible to raise funds through the stock market, or because they are considering the strategic development, they are interested in controlling investors.” Richard Youngerman told reporters.

In fact, venture capitalists may not disclose a clear direction for investment. However, there is still a trend that can be generalized. From pure alternative energy development to cleaner technology applications, it is tilted from upstream to downstream. This means a shorter industrial chain, faster access to terminals, and more open market capacity.