Garage Technology Ventures LLC, one of the original investors in the online radio service Pandora Media Inc. (P), is working with corporations to provide support for clean-energy startups as traditional venture capital funding dwindles.
The collaborative approach represents a shift in the standard venture-capital model and may lead to as much as $40 million in annual investment to commercialize technologies in renewable energy, storage and industrial efficiency, Bill Reichert, a Garage Technology managing director, said by telephone
“We’re investing off their balance sheet and co-managing the process,” Reichert said. “We become an extension of, and an intelligence resource to, their venture group and to their corporate R&D group.”
Garage is seeking to tap corporations for capital as other sources shrink. Venture capital and private-equity investment in clean energy totaled $4.9 billion worldwide in the first three quarters of 2012, compared with $6.3 billion in the same period last year, according to Bloomberg New Energy Finance.
There’s about $2 trillion in cash that’s “stranded” on corporate balance sheets and may be steered toward supporting startups, Reichert estimated. He wouldn’t identify the corporate partners.
Unlike mutual funds, pension funds and endowments, which typically are focused on generating returns, corporations are willing to pursue both strategic and financial objectives. “There are vast amounts of capital out there that have not found a particularly efficient way to be mobilized into building an innovation pipeline,” he said.
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