September 23, 2011 source: Forbes
What the Solyndra Bankruptcy Means for Cleantech Investors
by Jennifer Kho. Forbes Contributor
As executives of defunct solar-panel manufacturer Solyndra keep mum in Washington, Silicon Valley and Wall Street are discussing what the bankruptcy – and the federal investigation – could mean for investors.
“It has an impact; it’s such a big story,” says Sheeraz Haji, CEO of research firm Cleantech Group.
In what some are calling “the Solyndra effect,” industry insiders are concerned that the news could have long-term repercussions on the industry and on its financial and political backers…
The Danger of Generalization
One big danger, Haji says, is that people will generalize about the solar – or even the whole cleantech industry – based on Solyndra’s high-profile failure. “I do worry that people will generalize that all solar is bad, [when] some companies are really performing well,” he says. “And then I worry that some people will generalize and say, ‘Oh, all cleantech is bad.’ There are going to be some companies that fail and some that do really well. Solyndra should not be used as an example across all cleantech.”
Nat Goldhaber, a partner at Claremont Creek Ventures, doesn’t think that will happen. Earlier this month, the VC firm invested in Clean Power Finance, which is helping solar installers get financing for residential projects. Goldhaber claims there’s still plenty of investor enthusiasm for companies that are installing or financing solar projects, and says he’s not seeing any chilling effect on the number of people putting solar panels on their roofs. “In fact, we’re seeing growth,” he says.
Michael Butler, CEO of investment bank Cascadia Capital, says he also isn’t seeing an immediate impact on private equity because of the news. “I think a lot of people expected Solyndra was not going to make it, and a lot of investors already moved away from investing in companies that depend on grants or loan guarantees,” he says.
Solyndra’s anticipated failure was already priced into the private-equity market six months ago, he says. General market investors have already exited solar, for the most part, and those who are still investing in solar are very savvy and unlikely to be surprised by the news, he adds.
Smaller Appetite for Solar Manufacturing
Still, Goldhaber says the Solyndra failure certainly could dampen VC appetite for big manufacturing deals, at least in the U.S. “I would bet it will be considerably more difficult for VCs to look their LPs in the face and say they’re going to invest in another major manufacturing play,” he says. “That said, there are a lot of contrarians out there, and there’s always a possibility someone will find something really cool – someone who can make a panel for 50 cents – and go and do it. But the chances are smaller now.”…
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