The role of government in supporting the emergence of clean energy venture capital investing in Switzerland

While the energy industry is one of the key sectors to address sustainable development, and investment opportunities in new "cleaner" technologies are abundant, the share of venture capital that is invested in sustainable energy is still very low. Furthermore, Swiss venture capitalists with a focus on energy tend to invest most of their funds abroad. Hence, there appears to be a significant funding gap for Swiss early-stage technology ventures in the energy sector. One option to close this gap might be a dedicated government venture capital fund investing in this sector. A panel discussion at the University of St. Gallen's 7th Forum for Sustainability Management, with participation from the Swiss Federal Office of Energy (BFE), private Venture Capitalists and other experts, has reviewed foreign experiences and discussed possible options for Switzerland. In order to focus this discussion towards specific results, BFE has asked IWOe-HSG to prepare a pre-study to investigate the issue of government support for energy venture capital and provide preliminary conclusions for Switzerland. The pre-study has reviewed VC literature and empirical examples of government support for venture capital, with a particular emphasis on sustainable energy or cleantech investments. It has also reviewed existing forms of support for innovation and venture capital in Switzerland, to the extent that they may be relevant to the percieved lack of VC funding for early-stage sustainable energy firms.

Key research questions:

1) What is the theoretical rationale for government intervention in the market for sustainable energy venture capital?
2) Which relevant schemes for support of venture capital and innovation in the Swiss sustainable energy sector can be identified?
3) Which policy options are available for government agencies to support the emerging energy VC market?
4) Which models have governments used in other countries to stimulate VC investment and/or sustainable energy ventures respectively?
5) Based on the above, which issues would need further analysis if BFE were to pursue the topic of government support for energy VC further?