With the funding coming from the Obama administration on electric vehicle and other energy research development, this might continue stimulating the investment industry to pour additional green money to the clean technology and industrial biotechnology industries.
According to a recent report from Ernst & Young, US venture capital (VC) investment in cleantech companies in the second quarter of this year reached $572 million, an increase of 73% in terms of capital, with 48 financing rounds, a 100% increase in number of transactions compared to Q1 2009.
Solar deals received the lion’s share of capital within the energy/electricity generation category while smart grid companies seem to be doing well within the energy efficiency category.
Alternative fuel investment was driven by the $40 million later stage round investment in biofuel company Gevo. Joseph A. Muscat, Ernst & Young Americas Director of Cleantech, noted that investments exhibit a shift from companies in the product development stage toward companies in the start-up and shipping product stages.
Cleantech Group noted in its July reportthat the global clean technology sector might have already reached rockbottom in the first quarter in terms of VC investment. The groupestimated second quarter results for cleantech venture investment total$1.2 billion across 94 companies worldwide, indicating a rebound fromthe previous two quarters.
The transportation sector was the forerunner, with vehicles,biofuels and advanced batteries bringing in a combined $607 million,said to be the highest level of venture investment ever received in asingle quarter.
Unlike the US solar investment landscape described by Ernst &Young, Cleantech Group noted global solar investments took a dramaticnose dive to its lowest level of investment in more than three years,with only $114 million invested, down from an all-time high of $1.2billion invested in the third quarter 2008.
“I don’t expect solar tobasically go away or investors not to fund anything in solar, but itwon’t reach $1.2 billion in investment anytime soon,” said Brian Fan,the Cleantech Group’s senior director of research.
Fan suggested solar’s slump is because the concentratedsolar power (CSP) and copper indium gallium (di)selenide (CIGS) cellsegments have been very capital intensive. He indicated investors arealso not funding large rounds of $100 million to $150 million inthin-film photovoltaic and CSP.
Fan also said cleantech companies receiving government stimulusfunds have “changed the playing field.” Companies without governmentaffairs officials or who aren’t hiring lobbyists are at a disadvantage.
Another report,this one from Greentech Media, agreed that green technology investmentsrebounded in the second quarter. They estimated VC investment in greentechnologies totaled $1.2 billion in 85 deals, up from $836 million in59 deals in the first quarter.
“One of the drivers forsteady second quarter venture investment was the promise of stimulusmonies offering startup investors a non-dilutive funding source,” saidGreentech. “The growing belief that credit markets and the economy areon the road to recovery has investors back in the market. Greentechmarkets are massive and diverse and investors are starting to pouradditional money into the next wave of greentech opportunities.”
2009 is expected to be a year of consolidation anddevelopment while 2010 and 2011 will be the year greentech breaks. IPOsand acquisitions of VC funded firms in solar, smart grid, greenbuildings and biofuels are also expected, according to Greentech.