US cleantech venture capital investments hit a record high in 2008

5 February 2009

Cleantech venture capital investments hit fresh highs in 2008 with $4.7bn raised in 186 financing rounds, marking an increase of 68 per cent in annual capital invested and a five per cent increase in annual financing activity, according to a report published by Ernst & Young.

The report shows that cleantech companies received $954m from venture capitalists in the final quarter of 2008, marking a $277m increase from Q4 2007. However, it slipped below the record $1.7bn invested in Q3 2008.

Electricity/energy generation, alternative fuels, energy efficiency and energy storage were the top four cleantech segments with each showing significant growth throughout the year. Eletricity/energy generation rose by 215 per cent in 2008, taking the total investments to $2.7bn.

Alternative fuels grew 50 per cent to $703m, while energy efficiency increased six per cent to $427m. Finally, energy storage raised $320m, showing an increase of nine per cent.

2008 marks a investment milestone, according to the report. Looking back to 2002, US cleantech companies raised a much smaller $234m in venture capital, with only 43 businesses raising venture capital, as opposed to 171 in 2008.

Joseph Muscat, Americas director of cleantech, Ernst & Young, said, ‘Investments made this past quarter suggest that investors are considering industry drivers that will propel cleantech companies long after the current financial crisis recedes. Investors and corporate executives alike continue to focus on growing operations to respond to opportunities created by growth in global energy consumption, corporate climate change initiatives, and governmental developments.’

The energy/electricity sub-sector was mainly solar-driven, reaching $539m in investments in Q4 2008, $444m of which was directed at solar companies. Three of thw top five deals for all of Q4 were California-based solar companies.

The alternative fuels segment came in second, managing to raise $236m during the closing quarter of 2008, representing 25 per cent of total capital invested. Within this sector, biofuels raised the largest amount. Energy efficiency raked in $68m during Q4 2008.

The results of the report show a growing trend towards a larger proportion of later stage investments as a significant number of cleantech businesses reach the pilot and commercialisation stage of their projects.

Later stage deals were responsible for 31 per cent of all the deals and just over half of the entire amount raised. Six of the ten biggest deals in Q4 2008 included first-time participation by private equity funds, highlighting the collaboration taking place between venture capital and other funding sources as they venture into the capital-intensive commercialisation stage.

The new Obama Administration has been a driving force behind the growth of cleantech. President Obama has pledged $15bn a year over the next decade to renewable energy, which would result in the creation of five million jobs, the majority of which would fall in the cleantech industry.

The economic stimulus bill currently under consideration by Congress also contains a number of tax incentives designed to encourage investment into cleantech.

Copyright © 2009 newnet

Tags: cleantech, venture capital

This story was published on Thursday, February 5th, 2009 at 3:40 pm and is filed under knowledge. You can follow any responses to article entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply