Cambridge Associates – Clean Tech Company Performance (Q1-2018)
To monitor the gross company-level returns of clean tech investments made by venture capital and private equity partnerships, Cambridge Associates LLC (CA) screened over 80,000 investments held by the over 7,300 funds in its Private Investments Performance Database to identify clean tech investments. The resulting clean tech sample analyzed in this report includes 1,538 investments in 933 companies across 570 funds as of March 31, 2018.
Summary of their data:
1. Peak investment in new clean tech companies occurred in 2008; since then there has been a significant decline in the amount of first-time capital invested in new clean tech companies.
2. Cambridge Associates’ company performance statistics include $37.8 billion invested in private clean tech companies, $26.5 billion in realized proceeds, and $20.8 billion in remaining net asset value through March 31, 2018. These numbers create a gross total value/paid-in capital multiple of 1.3x, a gross distributed/paid-in capital multiple of 0.7x, and a gross internal rate of return (IRR) of 5.7%.
3. Investments were drawn from 570 different funds (387 venture capital funds, 169 private equity funds, and 14 infrastructure funds).
4. Across the four major clean tech investment groups, 21.4% of capital has been deployed in renewable power manufacturing investments, 38.2% in renewable power development investments, 18.9% in energy optimization investments, and 21.4% in resource solutions investments. On a total investment basis as of March 31, 2018, three of the four clean tech groups have achieved a positive gross IRR. Energy optimization had the strongest returns in gross IRR terms, returning 10.1%.
5. Geographically, $23.8 billion (63.1% of capital) in the Cambridge Associates sample was invested in U.S.-based companies. Developed markets outside of the United States received $9.1 billion of investment (24.1% of total clean tech investment), while emerging markets accounted for $4.9 billion of investment (12.9% of total clean tech investment). United States-based companies have generated a gross company-level IRR of 3.5%, while companies based outside the United States have generated a gross IRR of 10.4%. A limited sample of emerging markets investments (154) have performed better than United States and developed ex U.S. investments.
6. The clean tech private investment sector remains young, and investors must therefore be cautious about drawing forward-looking conclusions from the data at this time. As the sector evolves and matures, Cambridge Associates will continue to measure company-level performance of clean tech investments across all funds on a quarterly basis.
About Cambridge Associates
We are a leading global investment firm and aim to help endowments & foundations, pension plans, and high net worth private clients implement and manage custom investment portfolios that generate outperformance and enable them to maximize their impact on the world. Working alongside its early clients, Cambridge Associates pioneered the strategy of high-equity orientation and broad diversification, which since its inception in the 1980s has been a primary driver of performance for institutional investors. Today, we deliver a range of portfolio management services, including outsourced CIO, non-discretionary portfolio management, investment staff extension, and asset class mandates. Cambridge Associates maintains offices in major financial centers across the globe, with headquarters in Boston, MA.
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SOURCE: Cambridge Associates