dead plantLast week, I was interviewed on Las Vegas NPR about Tony Hsieh’s chances of building “the next Silicon Valley” in Vegas. While encouraged about a lot of what’s going on in Downtown Vegas, I flatly said the only way that was happening is if Hsieh could use his $50 million to build a time machine and go back to the early days of Silicon Valley and kidnap people like Fred Terman to start the semiconductor revolution in the desert.

The point is, Silicon Valley already happened. And amid all the great reasons people give for why the Valley became the Valley– Stanford, money, cultural influences– one of the biggest was the luck of those things coming together in a certain geographic place just as the ingredients that would lead to personal and business computing were coming together. Chips would lead to hardware which lead to software and all undulated between newer, smaller form factors and between consumer and business trends for decades. The Web pushed the wave further. And that wave has only recently showed signs of slowing with Web companies becoming decidedly less technical and more media-focused and mobile companies, potentially, giving that wave some more life.

In the middle of the last decade, as concern mounted about that wave ending, many people hoped that clean tech would be the next one. The next “computer.” But like Silicon Valley, that already happened and wasn’t destined to be recreated– not least with something that required expensive upfront costs and government subsidies.

That longing wasn’t just on the part of investors looking for somewhere to put their cash, it was also the hope of politicians who were looking for some way that America could keep its global innovating mojo. Barack Obama mentioned it in debates the first time he was running for president– you know before people could counter with “SOLYNDRA!”

Since then, exits have been disappointing, and funding momentum has sagged.

So, it’s not a huge surprise that money going into the sector has declined considerably year-over-year. According to research firm The Cleantech Group, investment in the sector slumped 33 percent since 2011. Investors put just $6.46 billion to work in 2012, down from $9.61 billion the year before. The number of deals was also down some 15 percent.

There were 37 clean tech IPOs in 2012, only sixteen of which were venture backed, according to the report. Likewise only a small percentage of the 213 acquisitions were venture backed. So much for 2012 being the year of the clean tech exit, as Kleiner Perkins’ John Doerr predicted back in late 2010.

The sector has had a black mark from many investors because of its reliance on government loans and subsidies– which are, by the way, considerably better in other countries, so they aren’t even that much of a plus, globally speaking.

Meanwhile when those government deals haven’t gone well, companies like Solyndra have become a political cudgel, further convincing VCs why they hate to invest in sectors that rely on the government for anything. Even those that have performed well– like Tesla– have become political cudgels in an age of heavy rhetoric and light fact checking.

But credit to the firms who were the loudest about betting on clean tech back when it was hot: They haven’t abandoned it all together. Kleiner Perkins Caufield & Byers was the most active, with Draper Fisher Jurvetson and Khosla Ventures ranking second and third.

This may well be one of those industries where they spoils are overestimated in the short term and underestimated in the long term. The firms who stick with it will have fewer and fewer people to share those spoils with as time goes on.

[Image courtesy Brett Whaley]