Report: Government Must Spend Quickly On Cleantech Or Face Bankruptcies

Feb 25 2009 | 9:13am ET

“Urgency surrounds numerous cleantech companies,” says a new PriceWaterhouseCoopers report on the state of venture-backed alternative energy companies.

The report says the U.S. government must begin spending the $83 billion it’s earmarked for cleantech in its $787 billion stimulus package by July to "avert a raft of potential bankruptcies or crippling retrenchments through 2009.”

In announcing the stimulus package, U.S. President Barack Obama promised money to the cleantech sector to tackle climate change and create jobs.

Tim Carey, U.S. cleantech leader for PriceWaterhouseCoopers, told Reuters that capital markets and exit markets (the option of selling off start-ups to other firms or taking them public) are now closed to the cleantech firms that have benefitted from the recent surge in VC investment. (And what a surge it was – according to the report, venture capitalists upped their investment in cleantech by 1500% in recent years, from $271 million in 2003 to $4.1 billion in 2008).

In the new economic climate, however, companies that had expected to ramp up operations rapidly find themselves unable to take the next step. Venture capitalists are finding it more difficult to sell companies or make initial public offerings, says the report.

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