Venture investments within clean technology is expected to decline this year compared to the all-time peak experienced in 2008, according to two recent reports.Market research and financial service Cleantech Group said some of the challenges predicted this year include twice the amount of failure rate of cleantech startups; delays in global climate change and US carbon cap and trade legislation; and shakeout in thin film photovoltaic solar because of previous over-investments and inflated valuations.The Cleantech Group also predicts this year will be full of acquisitions of green growth assets as government and large corporation research and development (R&D) spending on energy and other clean technologies expected to be largely flat.The group however is still optimistic about the energy efficiency market as well as investments in the wind energy sector. Other growth sectors include integrated energy management systems, smart grid, carbon content reduction in supply chains, and next generation solar materials and systems.According to the report, global clean tech venture investment in 2008 reached a record $8.4bn despite the 35% dip in fourth quarter compared to the 3rd quarter figure.
“As expected, clean technology venture investing slowed in 4Q08, but it’s important not to miss the forest for the trees,” said Nicholas Parker, Executive Chairman, Cleantech Group. “In 2008, there was a quantum leap in talent, resources and institutional appetite for clean technologies. Now, more than ever, clean technologies represent the biggest opportunities for job and wealth creation.”
The top clean technology sectors in 2008 were solar, biofuels, transportation, and wind. Solar accounted for almost 40% of total clean technology investment dollars in 2008, followed by biofuels at 11%.Market information provider Greentech Media said 2009 will be the year of smart grid, energy storage, and energy efficiency. Investment in traditional sectors such as solar and biofuels are expected to wane this year as investors are now looking outside traditional technologies at previously underinvested areas like energy storage, energy efficiency, recycling, water, cleaner coal and green IT.
“2008 marks the ‘end of the beginning,’ an end to the first few years of investment enthusiasm,” said Eric Straser, a partner at Mohr Davidow Ventures and leader of its cleantech investment team. “In the next period, we’ll see investors focus on strong investor syndicates, management teams that have proven they can execute, and value propositions that can truly deliver differentiated economics to the world’s largest markets.”
“We will continue to see investors allocate capital, albeit more cautiously, to cleantech as the underlying macro forces driving cleantech remain unchanged and cleantech looks well positioned to be a significant part of the new US administration,” he added.
Greentech Media reported that 2008 investment exceeded $7.7 billion in more than 350 deals. 2008 fourth quarter venture capital investments in clean tech was $2.5 billion, slightly down from the previous quarter’s total of $2.9 billion.Here are the deals reported by Greentech Media for the fourth quarter in each green tech sector:
|Green tech sector||Total Q4 VC funding||No. of deals|
|Ethanol, biofuels, gasification||$358.55M||18|
|EE, DR, and Smart Grid||$208.5M||11|
|Batteries, FCs, energy storage||$101.55M||14|
|Energy project development||$96M||2|
|E-Waste and recycling||$74.8M||7|
|Automotive and transportation||$29.03M||4|
|New coal tech||$9M+||2|
I guess this proves that clean technology is definitely not immune to the current global recession. Analysts are still “cautiously optimistic” for 2009 but a lot of investments are really hanging on the balance on whether new and current government administrations across the globe will enforce legislation and subsidies that will support this industry.