Associate Dr. Matthias van den Heuvel has coauthored an article in Energy Economics providing new causal evidence on the importance of demand for energy venture capital (VC).

The authors use data on 150,000 US startups active between 2000 and 2021 to better understand why VC investments have been relatively unsuccessful when funding new clean energy technologies. While both lackluster demand and a lower potential for outsized returns make clean energy firms less attractive to VC than other startups, the authors find no clear evidence that financial constraints are behind the lack of success of VC in clean energy. They also show that, while public sector investments might help attract VC investment, the ultimate success rate of firms receiving public funding remains small. These results suggest that governments will have a greater impact on clean energy innovation by stimulating demand than by investing in startups with a low likelihood of success.

The full article, “The Role of Venture Capital and Governments in Clean Energy: Lessons from the First Cleantech Bubble,” is available below.

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