While the biggest financial backers of California ballot initiative Proposition 23 are Texas oil companies, venture capitalists are among the big donors to its opposition. As of Monday, October 11, the opponents of Proposition 23 are spending more than supporters. Opponents of Proposition 23 raised $16.3 million to the supporters’ $8.9 million. The opposition has received almost $7 million in the last few weeks. The New York Times reported that, according to campaign finance records, opponents received major donations from Silicon Valley venture capitalists. One example is John Doerr and his wife Ann who gave $2 million.
Venture capitalists have heavily invested in California’s clean tech sector. According to data from the National Venture Capital Association (NVCA), there are 12,000 companies and 125,000 jobs in clean tech in California. Venture capitalists invested $9 billion in California’s clean tech sector from 2005 to 2009. During the first half of 2010, California attracted 40 percent of global clean tech venture capital, totaling over $11.6 billion, according to a study by Next 10. Clean tech manufacturing employment increased by 19 percent from 1995 to 2008, but total manufacturing employment decreased by four percent.
Emily Mendell, the NVCA’s vice president of communications, says, “Venture capital investment in clean technology start-ups in California are indeed supported heavily by AB 32.” Mendell adds, “If AB 32 is repealed, the California clean tech economy, which has been the root of jobs and innovation for the last several years, will be placed in jeopardy. We have publicly opposed Proposition 23 for just that reason.”
“The venture capitalists that brought us Google and Apple are now investing in the new clean energy economy because the companies are seeing returns on investment,” says Terry Tamminen, Gov. Arnold Schwarzenegger’s former chief policy advisor.
The Legislative Analyst’s Office (LAO) says that AB 32 would “discourage or delay investment and job creation in the energy efficiency and clean energy sectors, resulting in less economic activity in certain sectors than would otherwise be the case.”
Jim Watson, CEO of the venture capital firm CMEA Ventures, says that venture capitalists invest in California because “it has laws that favor clean tech.” According to Watson, California is five years into two decades of clean tech growth. AB 32 is essential for that growth. “It’s critical to have government support to develop those businesses in the early years,” he says.