As cleantech comes back into favor, it is expected that family offices and high net worth investors will once again return to the sector but their role will likely remain as a later stage passive investor, following trusted VCs, speculates Rob Day, a Partner with Black Coral Capital, in an article in Greentech Media. Cleantech sector investing is indeed coming back online, growing by 38 percent year to year with USD 563 million in first quarter investments, according to CB Insights. Elsewhere, Bloomberg New Energy Finance reports that investment in clean energy segments, including project financing, climbed 10% in the first quarter of 2014 compared to the same period a year earlier, reaching USD 47.7 billion, according to.
The “traditional” role family office in cleantech success stories is to follow brand name VCs for later stage rounds because they have the VC has the reputation and track record to inspire trust in family office decision-makers. There also has to be an affinity to cleantech as well as trust in the segment potential, factors that been lacking of late as the number of cleantech success stories is still not that high. As a result family office driven follow-up capital has dried up. Only a few VCs can go tap this co-investment segment, argues Day by understanding each FO’s tastes, its capacity for due diligence, and its willingness explore the types of financing that could benefit cleantech companies on the growth path, such as early project finance, or debt. (Image source: CB Insights)