No, USV isn’t suddenly becoming a cleantech investor. But for anybody allocating assets you should consider cleantech. Why? Because cleantech today is where Internet investing was after the dotcom bubble burst: all the institutional (and even most individual) investors have retreated while the secular trends are all in favor. The price of many publicly traded cleantech companies is in the dump (a few bright lights such as Solarcity and Tesla notwithstanding, aka the Elon Musk effect) and private cleantech companies are having trouble raising money, especially at the early stage (angel through Series A).
On the trends side, the evidence around climate change is becoming ever stronger that human made greenhouse gases are the key forcing function for the next hundred years. The change appears to be accelerating in particular with Greenland melting at a faster rate than predicted by even the most aggressive models. These changes are receiving more coverage and with storms like Sandy taking place public opinion in cities like New York is beginning to change. Check out this Google trends chart. While there is still some overall decline the map in the bottom right is super telling. The search volume is coming from the places that are most affected (in particular look at Alaska!).
What would be the best investment strategy here? Place a number of small bets in public stocks that are particularly beaten up with companies such as Amyris or Gevo and/or invest in some new early stage companies (which could include information systems for measuring and tracking carbon). Each of these is essentially a call option on an acceleration in climate change. From an options pricing perspective these options seem significantly underpriced because people are vastly underestimating the volatility of the overall climate system (which is highly non linear). This is a perfect example of an antifragile investment strategy.
