How relevant is the term cleantech today? Has it had its day in the sun?
It's a heretical question for someone who's spent much of the last 10 years of his career furthering the cleantech meme globally. A former Managing Director of an organization that gets much of the credit for coining the phrase to begin with, I've been a big proponent of the term, to the intentional subordination of others.
But having just returned from a week of meetings with Silicon Valley investors, lawyers and others, I find myself facing the reality that intelligentsia in the sector are distancing themselves from the phrase.
In five days last week, I met face-to-face with two private equity investors, four venture capitalists, two lawyers, an entrepreneur and one of the heads of innovation for a global multinational—all with name-brand firms, all power players associated with some of the biggest deals cleantech has seen. I asked them each about the topic. And while all were quick to affirm their belief in strong future demand for what we think of as clean or green technologies, the term cleantech has undeniably fallen from favor, they said. Why?
- Cleantech has become built into every sector, with clean/green propositions in many technology verticals, from industry to IT to water to energy to agriculture; 'cleantech no longer means anything new anymore,' one said
- Cleantech is simultaneously 'too broad' (i.e. somatic shorthand for too many vertical industries) and 'too narrow' (i.e. become too closely associated with renewable energy to those who don't recognize the intended breadth as defined by Kachan & Co. and others) to be useful any longer, another said
- But the biggest reason—that we've written about for some time here, here and here—is that venture funds' Limited Partner investors have been underwhelmed (some used the term 'burned') by cleantech too much for too long, and the term is now poisonous for some venture partners; some are distancing themselves from it. Some have let go of their teams. So while there may still be relatively wide general industry momentum for the term cleantech, because lexicons don't change overnight, those at the very center of the space that we've thought of as cleantech are quietly starting to use other phrases. Deloitte, for instance, rebranded its annual invitation-only Napa Valley cleantech event last week as Energy Tech. Is it just a matter of time until others start picking similar monikers?
Virtually all I met with agreed that what we've thought of as cleantech to date is still an investable thesis: There's still resource scarcity. Governments are still seeking energy independence. Climate change is accelerating, not abating. Large corporations continue to have an appetite for clean technologies for cost savings, differentiation vs. competitors and as high margin product offerings. So the markets for clean and green technologies are expected to be sustaining and long-term. But will there continue to be a unified name for the sector? Will the term cleantech rebound in popularity? Cleantech, at the time of this writing, appears to be in what IT analyst company Gartner calls the 'trough of disillusionment' in its widely-referenced 'hype cycle' model: