New energy-storage technologies may help slash greenhouse gases one day, but if someone pitches you an opportunity to invest in them, politely decline, a big backer of clean-energy is warning.

The race is on to develop a high-capacity battery capable of long-term power storage at an affordable cost. Such a device would boost the spread of solar and wind farms, which aren’t very useful when the sun stops shining or the wind dies down. The promise of being able to store electricity, like fuel in a tank, has led to an influx of investors throwing cash at startups in the field.

But prominent angel investor Tom Blum, who has backed around 30 companies, says he doesn’t know many people who have made money on battery-technology investments and advises those considering them to “run away,” according to Business Insider.

Venture-capital funding for battery-storage companies reached $1.6 billion in the first nine months of 2019, compared with $783 million in the same period in 2018, according to Mercom Capital Group. Most of that total came from one $1 billion funding round — by Northvolt in the second quarter — and the number of total deals declined to 25 from 38 a year earlier.  

Several factors influence whether batteries will be successful, including cost, the amount of energy that can be stored, lifespan and safety issues.  

“My advice to investors is don’t invest in batteries,” Blum, who funds early-stage startups as part of the Clean Energy Venture Group, told BI. “It’s an extremely complex area and it’s not easy for people to make money.”

  • Bill Gates and other investors have called on the government to end subsidies for solar power as the industry has gone mainstream, meaning private funding sources could become more critical. 
  • Venture-capital investments in cleantech, including solar, almost doubled to $15.1 billion in 2018 from 2017, according to PitchBook data. 
  • Clean Energy Ventures’s first green-energy fund was “significantly oversubscribed” to the tune of $110 million last  year, the group reported in October. It was seeking $75 million.