From Green Right Now Reports
U.S. venture capital investment in clean tech companies in Q3 fell to $575.6 million, a 55 percent decrease in capital, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource. There were 53 financing rounds in the quarter, a 22 percent decrease in deals compared to Q3 2009.
Despite these results, corporations continue to show a strong interest in the clean tech sector.
“This quarter reflects the ongoing volatility in clean tech investment that we have observed over the past two years, depending on the presence of the very large transactions we see in clean tech,” Jay Spencer, Ernst & Young LLP’s Americas clean tech director, said in a statement. “However, a number factors point to the continuing strength in the U.S. clean tech sector, including growth in energy efficiency investments and corporate involvement throughout multiple industries – from utilities to technology to consumer products.”
The energy efficiency segment attracted the most financing activity with 17 deals raising $161.7, increases of 21 percent and 6 percent, respectively. The largest energy efficiency deal was closed by Austin-based Smooth-Stone Inc. a developer of low-power data center chips, which raised $48 million. And GE announced plans to invest $432 million over the next four years to research, design, and manufacture energy efficient refrigerators in the U.S.
While deal activity in the energy/electricity generation segment grew 27 percent to 14 rounds, capital invested fell 39 percent to $203.9 million as investors focused on smaller, earlier-stage deals, including two seed round, two first rounds 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 quarter was a $65 million third-round, later-stage deal by Solaria Corp., a Fremont, Calif., developer of solar photovoltaic solutions.
Sizeable corporate investments in energy/electricity generation companies are helping advance the U.S. clean tech sector. For example, NRG Energy, Inc. agreed to pay $350 million for Texas-based Green Mountain Energy, an alternative energy generation and distribution company, while the Sharp Corporation announced a $305 million purchase of Recurrent Energy, a California-based photovoltaic power project developer.
Later stage venture financing continued to drive much clean tech investment. There was $407 million invested in 25 later stage deals, which accounted for 48 percent of deal activity and 70 percent of capital invested. The industry products and services segment saw the greatest number of later stage rounds, with nine transactions raising $99.5 million, Ernst & Young said.
Regionally, California experienced a significant decline in investment, with deals falling 44 percent to 21 and investment dollars falling 71 percent to $295 million. In comparison, California had five deals over $50 million one year ago, including the $286 million financing of Solyndra.
Massachusetts was next behind California with eight deals for $87.6 million, a 50 percent increase in deals and a 65 percent increase in capital invested compared to Q3 ’09. New Hampshire and Texas followed with investment of approximately $50 million each.