The long awaited boost …… for The Bellarine opportunities.

Let it flow: Can venture capital break our cleantech bottleneck?

By Giles Parkinson on 23 May 2012

Australia has long been a rich source of ideas, but a barren land for those seeking venture capital to help develop them. Just to give an example, some $9 billion is funneled into research every year, but only around $100 million is available for commercialisation, creating what Graydon Smith, the manager of venture capital funds at AusIndustry, describes as a “massive hour glass effect.” Little wonder, then, that so many Australian technology developers and IT and cleantech entrepreneurs beat a path to the US, and Silicon Valley in particular.

That bottleneck is about to be eased following a major of injection of new funds into the VC market, specifically for renewable energy and cleantech developments. Southern Cross Venture Partners, the US-Australian VC fund manager which won the government’s Renewable Energy VC mandate with the help of $100 million from China’s Softbank, is expected to announce its first investments in the coming weeks.

Just to confirm the hour-glass analogy, Southern Cross managing director Gareth Dando says the company has been flooded with “hundreds” of applications, proposals and inquiries since the mandate was first announced last December. “There has been an avalanche of interest. People have been waiting on this for a while,” Dando told RenewEconomy in a rare interview. Interestingly, a lot had come from biofuels and waste-to-energy technologies, with a range of others relating to wind, solar, and enabling technologies. “We are seeing a lot of genuine innovation,” he said, before adding: “We have no particular view on which technologies (it would favour).”

The Renewable Energy VC fund will focus on generation, along with hybrid solutions and enabling technologies (such as batteries and grids). But Dando said the size of the fund – $200 million – is significantly bigger than any that have preceded it. “The other funds have not had the capacity to make the investment that we can… so it will change the game in that respect, and give them more certainty about the availability of funding.”

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