Braemar Energy Ventures has closed its third fund dedicated to energy and green technology to the tune of $300 million. Not bad, for a tough year for green VC fundraising.
It’s the third such fund for Braemar, and exceeds the $250 million raised for its last fund. New limited partners include Munich Re, HarbourVest, the state of Rhode Island, Rothschild Investment Trust and Invesco on behalf of the California State Teachers’ Retirement System, and returning LPs include MassMutual, Alpinvest Partners, Morgan Stanley Alternative Investments, Macquarie and the government of Singapore.
Strategic investors included utility AEP and “several multinational energy companies from Asia and the Middle East,” the New York- and Boston-based firm said in its press release.
Braemar’s green portfolio includes CIGSsolarstartup Stion and car-charging company Coulomb, smart grid startups like Grid Net, Utilidata and Viridity Energy, energy storage startups like Ioxus and PowerGenix, and biofuel companies like Proterro and Enerkem.
Of course, it hasn’t been all roses since them -- A123, for one, has seen its shares plummet as the lithium-ion battery maker struggles for survival, and Verenium recently said it might have to issue new securities to pay down debt.
Indeed, Braemar’s new fund is a bit of an outlier when it comes to fundraising for green VC investment. Certainly overall investment has dropped from the go-go days of 2008, when VCs were plunking billions into solar, biofuel and EV startups with the hopes of outsize returns.
Since then, the recession and ongoing economic woes of Europe and the United States, solar competition from China and other global factors have conspired to make a very difficult climate for green technologies to thrive. Global green energy investment dropped to $29 billion in the first quarter of 2012, the lowest quarterly total since 2009, Bloomberg New Energy Finance reported in April.
These factors have made it challenging to raise money for new green funds. While big green VC firms like Kleiner Perkins, Khosla Ventures and VantagePoint Venture Partners have continued to put money into the sector, early-stage investments have shrunk as a share of that investment.
At the same time, questions remain whether green technology companies can achieve the 5X-and-up returns on investment that VCs tend to seek. Certainly the rise of Facebook and social media has also diverted VC funds from greentech, though it’s possible that Facebook’s lackluster IPO could reduce expectations in that field.
Of note: Braemar also invests in more traditional energy sectors like oil and gas, which have been doing quite well lately. Portfolio companies include CoalTek and Cirus Energy working on cleaner coal, and Afina and Fractal Systems working on converting heavy and waste oil to usable products. More out-there investments include its stake in General Fusion.