U.S. Venture Funds Invest $1B in Cleantech Companies

by Terrence Murray - November 2, 2011

Last quarter U.S. venture capital funds invested $1.1 billion in cleantech companies across 76 deals, according to an Ernst & Young analysis of data compiled by Dow Jones VentureSource.

The bullish data is good news for a renewable energy sector wrestling with an overall uncertain funding climate. On a consecutive quarter basis, dollars invested in the third quarter were 4 percent above the amount recorded in the previous quarter.

Energy storage companies raised the most amount of money, with $421 million secured last quarter. Fuel Cell maker Bloom Energy, which is backed by Kleiner Perkins Caufield & Byers, accounted for a major tranche of that capital inflow, with  $150 million raised last quarter.

Companies developing electricity generation technology  brought in the second largest amount of  venture capital, allbeit at levels far below what energy storage companies raised. In the generation segment Solar technology developers brought in the most amount of growth capital with $195 million raised last quarter, about 77 percent of the $255 million secured  by the whole sector.

As for companies in the energy efficiency space, they raised $245 million, up 23 percent from the year ago period.  The segment saw the most transactions — 21 financings recorded last quarter — a confirmation of the growing appetite by early-stage investors for the sector’s more modest capital requirements, compared to generation companies.

Last quarter also saw 11 cleantech mergers and acquisitions with a disclosed value of $222 million. The largest of these was the $131 million acquisition by MEMC and its subsidiary SunEdison of FRV, the US subsidiary of Spanish solar photovoltaic power developer Fotowatio Renewable Ventures.

While venture capital funds have not decamped the industry, they are having a harder time raising dedicated cleantech funds. As previously  reported by G.E.R., U.S. VCs raised $1.72 billion last quarter, which was the second straight quarterly decline and a significant drop from the $7.63 billion funds raised in the first quarter of 2011. This melting capital pool ensures longer fund raising cycles for cleantech companies, which will have to convince evermore selective venture capital funds to invest in them.

Leave a Reply