I am in Zurich this week attending the 2010 European Energy Venture Fair.  It's a good "one stop shop" event for meeting most VCs and investors involved in clean energy in Europe.  It's very heavily geographically focused -- there are not many investors from North America who aren't cross-Atlantic shops, and I haven't found many Asian investors, etc.  And so I assume it makes it a nice cross-section of where European cleantech investing is right now.

So some quick thoughts in no particular order:

1. In going around the room (~200 or so participants), the first thing that strikes you is how many smallish funds there are in this community.  <$200M in size, even for growth-stage focused investors, seems to be the norm.  Often <$100M.  It's unclear to me whether that's reflective of difficulties in fundraising in comparison to North America, where venture capital is more established within the LP community, or whether it's reflective of smaller deals here on average.  I think the two are related.  Smaller funds mean smaller deals mean more conservative growth paths (ie: lower cash burn) at the startups means smaller funds.  And yet these smaller funds still most often have fairly large teams.  I'm not sure how those economics work for GPs... 

2. The other thing that strikes you is how many of these funds are actively fundraising.  There may be a selection bias (GPs tend to go to conferences when they're fundraising), but still it's at a striking level.  Some proof that the dynamic I'm seeing in North America -- that GP fundraising fell behind in 2009, making for a very crowded marketplace in 2010 -- is also true here.

3. Anecdotally seems like a lot of these investors really sat on their cash last year.  But that Q4 is gearing up to be a relatively up quarter in terms of deal count.

4. Taking a 6pm redeye flight to Europe is a bad idea unless you have a 9am meeting the next morning that you absolutely have to make.  A takeoff at that time is guaranteed to make sure that by the time you're finally starting to fall asleep, you're landing.  Makes subsequent lengthy afternoon presentations on the pros and cons of various battery chemistries somewhat deadly...

5. I'm seeing a distinct rise in the number of cleantech-focused family offices being launched and staffed with former institutional VCs.  I think it's indicative of a two things: a) cleantech venture returns have been disappointing to these families as passive LPs to date; and b) there's increasing interest in developing investment models in cleantech that aren't necessarily the pre-established models of traditional private equity asset categories.  It also shows that there continues to be strong buy-in for the long-term cleantech investment thesis.  I'm also already seeing many of these family offices, and more generalist family offices with strong interest in cleantech, teaming up for deal syndicates and diligence/dealflow resource sharing.  In other venture categories there's currently a (pretty useless) debate about angels versus VCs... but in cleantech there's a much less talked about rise of the "large, flexible investor".  True not just in Europe but also in North America. Interesting to see.  Doesn't bode well for those cleantech VCs who've raised their funds from family office LPs, however, since those LPs may be trending toward doing their own direct investments instead... 

6. European markets for cleantech products and services are strong.  And yet the venture capital community seems small by comparison.  It's not like the market is dominated by outside (ie: Sand Hill Road) investors either.  I think there are cultural and institutional reasons why the entrepreneurs in this region might not turn to VCs nearly so often as they do in the U.S.  Plus, the large corporates have more of a tradition of doing their own technology development here, not essentially outsourcing their R&D to startups like large corporates in the U.S. more often do.  And I think much of the investment activity is to be found in project finance and not technology development.  

7. Not only has this been a strong event, it's also been a phenomenally beautiful location.  Well done by the organizers.