|Cleantech Investments Hit a Record High|
By David Ehrlich
July 8, 2008
Second quarter venture investments in North America, Europe, China and India
total $2 billion across 96 companies.
Cash continues to flow into cleantech, with venture investments hitting $2
billion for the second quarter of this year, an all-time record quarter
according to a report released today.
The report from the Cleantech Group said that total covers North America,
Europe, China and India and spans 96 companies, with solar thermal and
second-generation biofuels in the lead.
"There's a growing awareness of the severity and scope of the problems that
cleantech is trying to address," said Brian Fan, senior director of research for
the Cleantech Group.
"Investors are seeing opportunity in funding technologies and companies that are
trying to solve some of these problems versus putting capital into other
segments of the market."
The Cleantech Group, which provides research, investment services, and forums,
is the owner of this website.
The second quarter total is a 58 percent increase over the same period a year
ago, and 48 percent over the first quarter of this year (see Biofuel, wind and
solar investment waves over?).
The previous record quarter was the third quarter of 2007, which saw $1.8
billion of cleantech venture investments.
"I don't think we're in a bubble," said Fan. "When you look at all of the
estimates on how much capital needs to be deployed to create a clean economy,
the numbers are mindboggling. They're in the tens of trillions of dollars."
He said that the $2 billion total for the quarter is just a fraction of the
amount that needs to be invested in things like new agricultural technologies
and new water technologies to feed and ensure fresh potable water for the 6
billion people on the planet.
Second-generation biofuels, which do not rely on food crops as a feedstock, made
a significant mark in the second quarter numbers.
Ten companies, including Range Fuels, Sapphire Energy and Mascoma, raised a
combined $280 million, with $136 million going into cellulosic ethanol startups
and $84 million into algae.
Sapphire Energy pulled in $50 million in financing — the single largest round
ever raised by an algae company.
Fan said he expects other algae companies to aggressively raise new rounds to
keep up with Sapphire.
"What we've seen in other sectors is that scale matters," he said. "It's very
early in the game for algae, but now we're seeing companies move from small
scale R&D pilots to larger volume production."
"The actual technology itself may not be the sole important determination in who
wins this game. Whoever gets to scale first has a much better chance of becoming
a dominant player in the space."
In solar thermal, five companies including eSolar, BrightSource Energy and
SkyFuel raised a total of $278 million in the quarter.
Combined with the $100 million acquisition of Stirling Energy Systems by NTR
(see Stirling engines meet solar power in the desert) and the $165 million
raised by Solel, Infinia and eSolar in the first quarter, solar thermal
companies have raised, year-to-date, $543 million.
"The most surprising takeaway for me was that solar thermal has been around for
decades now," said Fan. "Now half a billion dollars of capital have gone into
what's essentially been decades-old technology, producing commercial power since
the early 80s."
But he said old doesn't mean bad. Fan said the advantages of solar thermal
include its ability to scale, store power and dispatch power during peak demand times.
U.S. companies received $1.49 billion in the quarter, accounting for
approximately 74 percent of the total. The European tally, which includes
Israeli companies, was $257 million, accounting for approximately 13 percent.
In China, companies raised $235 million for a 12 percent piece of the investment
pie, and Indian companies pulled in $11.1 million, marking 0.6 percent of the total.
The top five investors for the quarter were Kleiner Perkins Caulfield & Byers,
Foundation Capital, Quercus Trust, Khosla Ventures and Draper Fisher Jurvetson.