More Money, Fewer Deals in US Clean Tech

Although it seems like it is taking forever for the US clean technology industry to take off, venture investment in the market is on the rise, according to recent reports.

US venture capital investment in clean tech companies increased by 54 percent to $1.14 billion in Q1 2011 from $743.3 million in Q1 2010, despite a 13 percent decrease in deals year on year from 79 to 69, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource.

The top 10 deals in Q1 2011 totaled $683.1 million, 60 percent of the total raised for the quarter, and two deals accounted for 18 percent of the total dollars raised.

“The US cleantech market experienced continuing momentum — both from a venture capital perspective and among the larger investment community. The second generation of solar companies and larger, later stage rounds dominated VC investor interest in Q1,” said Jay Spencer, Ernst & Young LLP's Americas Cleantech Director, in a press release.

Here are some highlights from the report:

  • The Energy / Electricity Generation segment, led by strong solar investments, raised $450.3 million through 16 deals in Q1 2011. The solar sub-segment accounted for 39% of the total dollars raised for the quarter with $362.7 million, a 162% gain from Q1 2010.
  • Large investments also bolstered the Energy Storage segment to be the second largest in terms of dollars in Q1 2011. The segment is up 671% year on year after raising $262.4 million through 14 deals.
  • Battery companies drew in $121 million of this investment compared to $8 million in Q1 2010, a 1405% increase, while Fuel cell companies attracted $106 million in Q1 2011, a 308% increase year on year. Two deals accounted for 64% of the dollars raised in the Energy Storage segment overall, including Bloom Energy, a California provider of fuel cell-based power generators, which raised $100 million.

The report shows that investors continue to be cautious with money in this segment, favoring later-stage companies with a proven track record for sales:

    Companies generating revenue raised $596.4 million, 52% of the total dollars invested in Q1 2011, up from just 34% in the same period last year. Later stage rounds accounted for 28 deals and $721.6 million, representing 67% of the total quarterly investment compared to 57% in Q1 2010. However, first round investment also increased by 77% to $146.1 million compared to $82.7 million in Q1 2010.

There were actually two clean tech IPOs filed in early 2011 in a generally lackluster IPO market, according to Bloomberg New Energy Finance: California-based biofuel producer Solazyme Inc. filed its $100 million IPO in March 2011 and Gevo Inc., Colorado-based biofuels producer, raised $107 million through its February 2011 IPO.

5 comments on “More Money, Fewer Deals in US Clean Tech

  1. DataCrunch
    May 2, 2011

    Hi Barbara, it seems like the trend is more towards follow on investments rather than true venture or seed capital for new startups.  There needs to be more investment capital available for entrepreneurs and new startups in this sector.    This is probably due to the fact the these types of investments may be more capital intensive and the return to investors can take longer than other technology plays, such as software.

  2. mfbertozzi
    May 3, 2011

    I would like to put on the table a topic strictly related to investments process reported by Barbara in her editorial. One of the biggest european telecom operator has launched on the market a massive campaign for selling home xdsl routers doable to save 40% energy consumption. Target is to reach by 1year from now 1 million devices sold that means CO2 saving equivalent to 11.500 cars no running in daily traffic.

  3. Jay_Bond
    May 3, 2011

    I find that interesting that no companies in the U.S. are following the footsteps of the European Telecom company. If they can produce a 40% energy savings and reduce CO2 emissions, the U.S. by sheer volume should be able to see huge savings. So many people and companies talk about investing in greener technology, but nobody seems willing to take the time and invest the money to see major growth.

  4. mfbertozzi
    May 3, 2011

    It is correct Jay_Bond. Anyway I can report a US start-up has promoted a social group on Facebook with the aim to make people aware on savings about “vampire” powers due to led on home devices. Believe it or not we are speaking about 50-60US$/year  as saving and several CO2 Kilos emissions reduction for each one home.

  5. Anand
    May 4, 2011

    In my opinion venture investment in the clean technology industry will increase in coming days. Two factors which will give impetus to this investment  decision are rising crude oil prices and increasing demand for renewable energy resources in wake of events that unfolded in Japan.

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