US Cleantech VC Investing up 83% to Record High
Venture capital investments in US cleantech companies grew by 41% to $961.7 million in the second quarter from $683.5 million in the first, according to an Ernst & Young report based on data from Dow Jones VentureSource.
This is the highest total cleantech investment on record, and comes amidst a quarter in which overall venture capital investment was down by nearly 8%.
Year-on-year cleantech investment follows this upward trend, increasing 83% from Q2 2007.
Energy/Electricity generation companies attracted the most investment of any sector this quarter with $494.9 million - 52% of the total. The top three deals of the quarter were solar-related companies. The deals included SunEdison in Beltsville, MD, which raised $131 million, eSolar in Pasadena, CA, which raised $130 million and BrightSource in Oakland, CA, which raised $115 million. It is also worth noting that corporate investors were involved in all of these deals.
Energy efficiency companies made up 20% of total investment dollars and continues to be a top cleantech investment segment despite a slight 4% decline to $188.3 million in Q2. The third largest segment this quarter was alternative fuels, which comprised 13% of the overall US cleantech market. The segment made up entirely of biofuels transactions, attracted $129 million of investment, down 44% from the previous quarter.
“Efficiency-related investments, such as smart meters and LED technologies, have seen relatively steady levels of deals and investment over the past few quarters because they can be ready for an exit more quickly than other renewable energy technologies,” says Joseph A. Muscat, Americas Director of Cleantech and Venture Capital, Ernst & Young LLP. “Investment in increased efficiency can have a shorter payback period since many of these technologies are relatively capital efficient compared to the capital intensity of a manufacturing-heavy segment like biofuels.”
The price of energy is driving demand for cleantech innovation in the corporate sector. New corporate commitments to climate change are also stimulating cleantech activity: 77% of large corporations have integrated cleantech into their internal systems or supply chains and 63% offer cleantech-related products, according to a recent Ernst & Young survey of 150 large corporations.
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August 19th, 2008 at 10:27 am
[...] & Young highlights a bright spot in the energy picture as US Cleantech VC Investing achieved a record high in the second quarter. While Congress has yet to act on renewal of soon-to-expire solar credits, it [...]