Venture Capital and Clean Technology Investment and Innovation

Abstract

This paper examines venture capital investment into clean technologies. The determinants examined are government policies, venture capital trends, energy prices, and other macroeconomic variables. The history of cleantech investment is examined, and econometric methods are used to examine cleantech venture capital’s relationships with energy prices, aggregate venture capital investment, and macroeconomic variables. This paper finds that government policy, oil prices, the economic outlook, and trends in venture capital investment are very important determinants of venture capital investment into cleantech. The findings suggest direct relationships between government support of cleantech, higher oil prices, and positive economic outlooks with investment into cleantech. Also, this paper finds growing trends in venture capital investment and that capital inflows into the venture capital industry has a large effect in boosting venture capital investment into cleantech.