U.S. venture capital (VC) investment in cleantech companies decreased by 44% to $1.1 billion in the second quarter of this year (Q2 2011) compared to the same period last year, while deals fell 12% to 68, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource.
The decline in cleantech investment in Q2 2011 comes in comparison to the $1.9 billion invested in Q2 2010 – the highest level of quarterly VC investment on record, in which the top five deals amounted to $978.6 million. However, on a consecutive quarter basis, dollars invested in Q2 2011 were 8% greater than the amount in the first quarter of this year.
‘Cleantech financing levels remain strong in the context of investment levels over the past several quarters,’ says Jay Spencer, Ernst & Young LLP's Americas cleantech director. ‘We're seeing continued commitments to solar, electric vehicles and energy efficiency technologies from the venture community, as well large corporate and private investors.’
The energy and electricity generation segment continues to dominate cleantech investment. The segment raised $311.6 million during Q2 2011 and raised a total of $686.9 million through the first half of the year – just shy of the $700.6 million raised through the first half of 2010. Solar companies continue to draw the greatest support in this segment, with $234.2 million, representing 21% of the overall investment in Q2 2011.
Cleantech companies in the industry products and services segment raised the second largest amount in Q2 2011: $305.7 million, with a decrease of 53% from the record amount of $655.3 million that was raised by this segment during the same period last year.
Companies in the energy-storage market attracted $150.3 million – a 4% increase from the same period last year. This is largely attributed to the $54.5 million investment in General Compression Inc.
Cleantech companies in the revenue generation stage of development drew the greatest amount of VC investment in Q2 2011, with $865.2 million, 79% of the total dollars invested during the quarter. This is an 8% increase from investments during the same period last year.
In Q2 2011, California garnered 51% of dollars raised, with $548.8 million. However, the state faced a decline compared to the amount it raised one year ago, primarily due to five large deals that involved California-based companies in the second quarter of 2010. The Mountain region experienced a strong quarter, with $114.7 million – a 167% increase in dollars raised from the same period last year. The Northeast followed, with $109.8 million in investments.
New initiatives and funding continue to take shape from government, private and other corporate sources. In mid-June, the U.S. Department of Energy announced loans and guarantees or offered conditional loan guarantees totaling more than $32 billion to support 32 clean energy projects.
On the private investor side, a group of 11 wealthy U.S. families formed the Cleantech Syndicate, an investment fund to support renewable energy and power-efficiency companies at all stages of development. The families intend to invest up to $1.4 billion over five years, according Bloomberg New Energy Finance.