“99% of VC’s are looking for the same thing...a later stage company where they can get lucky with a near-term liquidity event at an inflated price without doing a lot of work. I do appreciate the drivers for this reality: VC’s are typically woefully understaffed and are usually managing more money than they can effectively put out unless they participate as relatively passive players in bigger deals where they can ride the coattails of others. The key limiting factor is time...not money. I also appreciate that the gestation cycle of Cleantech companies is long and, unless you stumble across a terrific early stage opportunity, you will do better betting on a later stage company and “flipping??? the deal to the public. The end result is that very little is actually produced by the process, and what is produced is done so very inefficiently. I submit that there are two ways to make money in the VC business...1) build a company and 2) anticipate a fad. The first is very hard and very few VC’s can actually pull it off...it also takes a long time and the whole VC system does not reward waiting around for 4-5 years while you build a company...your LP’s wouldn’t stand for it. 90% of all VC gains come from investing ahead of a “public valuation fad???. The name of the game is to get in at a relatively late stage and flip the deal to the public at a ridiculous price...then sell out, having done very little for the world. You probably don’t remember the early Cleantech euphoria...Plug Power came out at $15.00 per share, and went to $150 in 6 months...the investors in the deal congratulated themselves on their good work and their wonderful “value added???...of course, Plug went to $10 per share six months later and it was amazing how quiet the brilliant VC’s were...the same thing happened with Capstone and with many others...as well as with the over-priced ethanol and solar deals of recent history. The only thing that was accomplished was that a lot of money was wasted in the process...but, if you were lucky as a VC to get in and get out...it allowed you to raise your next fund and keep going.???So what do readers think? Is this spot-on? Partially right? Or way off base? Comments (add them to the site below, or email them to cleantechvc [at] gmail.com) are welcomed -- and if you want them kept anonymous, just let me know. As for me, I don't know whether to be flattered ("hey, I'm in the 1%!") or just to shake my head. For many investors I know (and certainly including myself), we're in the business of maximizing returns by helping to build companies for the long haul. Yes, exits need to be visible within a certain time horizon, but those exits for investors aren't the end of the effort, they're just the beginning of the next stage of growth for the company. As the examples given in that email, and plenty of others as well, have shown, it's often not a winning investment strategy to rush a company to exit before it's ready. But build a world-class company around a winning product or service offering, and the exit opportunities will be there (well, it's not that simple, but you get my point). This is all speaking very generally, of course -- sometimes the appropriate exit path will be short, sometimes it will be longer. But the important thing is that either way, the truly value-added VC will be working hard alongside the company's management team to build a company, not to "flip" anything. So while there may well be some VCs like this email describes, it's far from 99% of the community. The gestation period comment is also interesting -- yes, in many of these technology areas, the time to market from time of invention will be longer than in other venture sectors (think Web2.0, for example), this is something we've talked about before. But that doesn't necessarily mean that going all the way to later stage is the winning approach. It just means that early stage investors have to be very knowledgeable about the wide variety of markets we're evaluating opportunities in, and it means staying disciplined about not getting in TOO early. This longer gestation period is a special challenge for seed and angel investors in cleantech, which we've discussed before, but it's not what's driving the big trend toward later-stage investing in the sector. That's probably being driven, instead, by the lack of comfort felt by many of those investors who have been very recently jumping in, and the overall trend across all VC sectors toward later-stage investing. So there are a couple of key points here where I strongly disagree with this email. But there's also a lot of food for thought... What do YOU think?