The Big Deal: Nanosolar/Konarka

It is feast or famine for corporate venturing-backed solar companies currently, with Konarka Technologies falling into bankruptcy while thin film peer Nanosolar raised a further $50m.

In the past three weeks, venture investors have announced financings totaling $180m for four companies engaged in installing, developing or manufacturing solar cells and systems, according to data provider VentureWire – see its slideshow here. 

As the founder of one of the firms that has just been backed said: "My theory is that any company able to hold out to 2014 will be a winner."

Investors certainly seem to be parsing their portfolio to pick out likely winners in an increasingly expensive sector to back. Nanosolar has raised more than $500m in its lifetime, while Konarka raised $190m of venture capital before its failure, all dwarfed by the more than $1bn raised by Solyndra before its bankruptcy last year.

The solar industry has certainly been facing headwinds over the past few years following government flip-flopping on subsidies and whether supporting clean-technology would help or hinder their economies and growth prospects – the catchy headline from news provider Wall Street Journal sums up one strain of thought Europe’s Green Energy Suicide.

(By contrast, even if governments are providing fewer direct subsidies to clean-tech entrepreneurs they are facing calls to help them indirectly by making promoting corporate venturing as potential investors – with UK-based Ceres Power the latest, according to Global Corporate Venturing.) 

This is helping cause carnage among the solar energy industry. As trade paper PVTech said in an article about Konarka: "Altogether, 13 thin film firms have gone bankrupt or closed down since April 2010 when the first thin film company, SunFilm, closed its doors… As of the beginning of June, around 40 companies in the PV [photo-voltaic] industry have failed, of which 26 have been this year."

However, beyond having insights into the specific decision-making behind each of the companies that either gained investment or failed in their efforts there appears to be little obvious conclusions to draw for why one succeeds or closes its doors – the sunk cost fallacy didn’t help Solyndra, while only about half of the most recent closes have had corporations, which belies the assumption that clean-tech companies axiomatically need a large investor in the syndicate.

But a winnowing out of the sector will certainly have unintended consequences – either from spin-off companies formed by diaspora from bankrupt businesses, the most talented employees hired by the survivors, or perhaps other countries with longer-term views (or more money) picking up assets on the cheap.

As Konarka management said in the PVTech article, the company had received potential offers to either acquire or provide further funding, including from the Chinese government.