Possibly the area most affected is the work on behalf of companies to obtain federal money from agencies that include the Department of Energy, several attorneys with cleantech practices said. Susan Mac Cormac, co-chair of Morrison & Foerster's cleantech group, said firms whose practices were focused on loan guarantees are seeing less business.
The high-profile failures of solar panel maker Solyndra, which received a $535 million loan guarantee from the federal government, and others, have made it next to impossible for startup technology companies to obtain federal money.
"I think that everyone in cleantech is glad that 2012 is over and is looking forward to 2013," said Robert O'Connor, a partner in the Palo Alto office of Wilson Sonsini Goodrich & Rosati.
Yet O'Connor stressed that the cleantech industry is far from dead. "If Sand Hill Road were our only barometer, it would be one thing. But all of the big energy and industrial players are stepping up their investments across the clean technology sectors."
He cited companies as diverse as Chevron Corp., General Electric Co., Johnson Controls and BASF for their green investments.
"While the first stage of cleantech and venture capital have learned some tough lessons, there are many parallels between the first and second wave of dot-com [companies]," O'Connor said. In both instances, there has been a shift in focus from more capital intensive hardware and materials businesses to software and data, he said.
Restructuring scenarios such as pay-to-play are not unique to cleantech companies and as with any development-stage sector, there are some that are thriving, some that won't survive and most of the latter could not have foreseen the problems, O'Connor said.
"What we are seeing is that many of these companies are hitting a cash wall and we need to have the difficult conversations," he said. "There's also those ones that don't know if they'll make it and need to raise money in a difficult financing environment."
While there have been well-publicized venture capital firms that have curtailed clean technology investing, new money from both family offices and corporate investment arms is being pumped into the sectors, said O'Connor. "A majority of the deals we are working on involve at least one strategic co-investor." Strategic investors, generally the venture capital arm of a corporation, often put money in companies with an eye toward a joint venture or outright acquisition in the future. Due diligence on these transactions can be more intensive as it is more akin to that on traditional merger and acquisition deals than standard venture capital investments.
MoFo's Mac Cormac said the revenue brought in by the firm's cleantech practice has increased year over year, though she declined to provide numbers. However, much more of the work involves some type of restructuring and the financings are predominantly later-stage, she said. "We've had a couple of clients acquired for a song, but no one has gone completely out of business," Mac Cormac said.
