U.S. venture capital investment in cleantech companies in the third quarter fell to $575.6 million in 53 financing rounds, a 55% decrease in capital and a 22% decrease in deals compared to the third quarter of 2009, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource.
Later-stage venture financings continued to drive U.S. cleantech investment. There was $407 million invested in 25 later0stage deals, which accounted for 48% of deal activity and 70% of capital invested, according to Ernst & Young. The industry products and services segment saw the greatest number of later-stage rounds, with nine transactions raising $99.5 million.
While deal activity in the energy/electricity generation segment grew 27% to 14 rounds, capital invested fell 39% to $203.9 million, as investors focused on smaller, earlier-stage deals, including two seed-round, two first-round and five second-round deals. Solar companies represented the majority of investments in this segment, with 10 deals raising a total of $150.1 million. The largest deal of the entire quarter was a $65 million, third-round later-stage deal by Solaria Corp., a Fremont, Calif.-based developer of solar photovoltaic solutions.
Sizeable corporate investments in energy/electricity generation companies are helping advance the U.S. cleantech sector, according to the analysis. For example, NRG Energy Inc. agreed to pay $350 million for Texas-based Green Mountain Energy, an alternative energy generation and distribution company.
Regionally, California experienced a significant decline in investment, with deals falling 44% to 21 transactions and dollars falling 71% to $295 million. In comparison, California had five deals over $50 million one year ago, including the $286 million financing of Solyndra.
SOURCE: Ernst & Young LLP
