VC Firm Mohr Davidow Narrows Cleantech Practice

“The top five VC firms no longer admit they invest in cleantech,” according to Jigar Shah.

Eric Wesoff November 13, 2012

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

Mohr Davidow, once a leading cleantech investment firm, has narrowly channeled its cleantech scope.

Instead of the full spectrum of greentech, Mohr Davidow is now focused on the convergence of greentech with IT, the firm's traditional sector. According to Josh Green, General Partner at Mohr Davidow, cleantech IT is now a vertical within the broader IT spread. Green noted that vetting a company of this nature often takes both the greentech and the IT sides of the house. Green also said that the firm is "emphatically" committed to its portfolio and believes "that there are important winners in this portfolio. Our commitment and support of them is unwavering."

That said, of the thirteen companies in the VC firm's portfolio, which ranges from solar (Nanosolar) to lighting (Xeralux, Xicato) to green chemicals (Genomatica), few, if any, would meet the new IT-green convergence requirement.

It appears as if the firm changed its personnel structure as well -- dividing its staff into General Partners and Investment Professionals. Most of the cleantech folks, Erik Straser and Marianne Wu, are now Investment Professionals. Will Coleman has moved on to other things.

This shift at Mohr Davidow is emblematic of the larger dynamic in cleantech VC. Few home-run exits and a sluggish IPO market have generalist VC practices letting go of dedicated cleantech partners and moving away from cleantech. We saw this happen at Battery Ventures after Jason Matlof and others departed. Ullas Naik departed and left Globespan Capital with a reduced cleantech practice. Behind closed doors at the larger VC firms, there is also a "de-emphasis" away from cleantech. Publicly, these firms claim to be cleantech investors -- but try going to them with an early-stage solar or biofuels startup pitch.

Green VC investment stood at $1.6 billion in the third quarter, which is level with the second quarter’s tally. That isn’t much consolation, however, given that $1.6 billion represents a 30 percent decline from the $2.23 billion invested in the same quarter last year. Deal count also fell to 148, compared to 169 in the same quarter last year.

Overall, Cleantech Group is projecting 2012 will end up seeing only $6.8 billion in green VC, a 28-percent decline from $9.4 billion last year.