Clean-Tech Venture Investments Jump 68% In First Quarter
Venture capitalists invested $733.3 million in the clean technology sector in the first quarter of 2010, a 68% increase from the first quarter of last year, according to data released by Dow Jones VentureSource.
The number of deals, 72, was more than twice as high as a year ago. The recovery in clean-tech has been faster than in venture capital overall, which grew 11% in terms of amount of capital invested in the first quarter over last year’s figures.
Venture capitalists put a heavy emphasis on energy efficiency and early-stage companies during the quarter. The greatest proportion of deals in clean-tech was among seed and early stage companies, with 34 such transactions completed. That was 49% of the total financing activity, the highest percentage since the fourth quarter of 2008.
The big jump in both total dollars raised and number of deals compared to a year ago dwarfs the smaller recovery in the VC industry overall, according to new VentureSource data.
Energy efficiency companies drove the rebound, as investors were drawn to less capital-intensive companies.The energy efficiency subsector got the biggest share of attention from investors in the first quarter, accounting for 28% of the total capital with 20 deals.
“Investors today are more concerned about capital efficiency than ever before, and about a reasonable payback on an investment, and energy-efficiency related investments tend to have faster payback and tend to require less capital than large bets on the supply side like new solar panels and biorefineries,” said Paul Holland, partner with Foundation Capital, a venture firm that has been focusing on energy efficiency since 2002.
The energy efficiency sector may be “catching up” to the other clean-tech subsectors, said Holland, as it didn’t receive a lot of attention previously, when all eyes were on energy supply.
Although the energy efficiency sector could “become overinvested,” Holland noted, this is probably not yet the time, because demand for smart grid, smart materials and fuel efficiency technology is rising in the overall market. Electric utility energy efficiency budgets, for example, have grown 60% over the past two years, according to the Consortium for Energy Efficiency, a trade group.
Another large sub-sector receiving investor attention in the first quarter of the year was electric-vehicle technology, with Coda Automotive Inc. and Fisker Automotive Inc. securing close to $100 million each. The auto deals fell under the industrial products and services category, which received a total of $261.7 million in investment dollars in the first quarter, a 490% year-on-year increase.
Energy supply didn’t go unnoticed by investors. Energy and electricity generation companies received $179.6 million from investors, higher than a year ago when $138 million was invested.
- from Dow Jones Venture Wire.
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