Report: Cleantech A Winner In Declining VC Market

Jan 28 2009 | 9:14am ET

Cleantech was the only bright spot in a report on 2008 venture capital investment from the National Venture Capital Association (NVCA), PricewaterhouseCoopers and Thomson Reuters.

“Venture capitalists are being cautious with their dollars, which, in this environment, is the right strategy,” said Mark Heesen, president of the NVCA. “We are encouraged by the strength of the clean technology sector which continues to grow at a considerable rate.”

Venture capital investments last year totaled $28.3 billion in 3,808 companies – down 8% in dollars and 4% in deal volume year on year, according to the report.

On the other hand, clean technology investing accounted for 15% of all venture capital investing in 2008 compared to 9% in 2007. Investors put $4.1 billion into 277 cleantech start-ups in 2008 – up 52% from 2007. Seven of the top 10 VC deals of the year were in this category. Nevertheless, by Q4 2008, the effects of the financial crisis had set in and cleantech investment fell 14% quarter on quarter to $909 million.

Clean technology crosses traditional industries and comprises alternative energy, pollution and recycling, power supplies and conservation. The most popular clean technologies among venture capitalists in 2008 were solar energy and photovoltaic companies, which were on the receiving end of investments worth $1.8 billion – almost 50% of the total for clean energy companies.

The top three deals involved $300 million for Nanosolar, a solar-cell maker; $219 million for Solyndra, a photovoltaic solar company; and $140 million for SolarReserve, a producer of utility-scale solar power plants.

Start-ups producing energy from sources including ethanol and nuclear energy received $561 million, while companies recycling chemicals and solid materials raised $304 million. Battery start-ups raised $224 million and this will probably rise in 2009, thanks to increased interest from car makers in lithium-ion batteries.

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