The energy/electricity generation category garnered $118.5 million in venture investment in Q409.
From Green Right Now Reports
U.S. venture capital investment in cleantech companies in Q4 2009 decreased 45 percent to $564.5 million compared to the prior quarter, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource. The research found that more VC dollars are flowing into the energy efficiency category.
Ernst & Young said the San Francisco Bay Area was the leading region for cleantech investment in 2009, with $1.2 billion invested for the year and $295.6 million in Q4. Southern California came in second place with annual investment of $329.5 million and Q4 investment of $30.5 million. New England was the third-largest regional cleantech center with $283.7 million for the year and $38.0 for Q4.
The number of deals increased 21 percent to 62, according to the report. But investment in 2009 totaled $2.6 billion in 193 financings rounds, a decline of 50 percent in dollars and 16 percent in the number of deals compared to the record investment levels of 2008.
“These results reflect the easing of an investment cycle largely driven by the significant capital demands of solar companies and a shift toward energy efficiency products with lower funding requirements and potentially faster commercialization,” John de Yonge, Ernst & Young LLP’s associate director of Americas Cleantech Network, said in a statement. “Energy efficiency is in the sweet spot of many venture capital investors in terms of skill sets and funding parameters, particularly given its basis in information technology. Consequently, we may see investor participation in cleantech broaden.”
In 2009, the analysis found the number of financing rounds in the energy efficiency category — encompassing technology areas such as smart grid and residential and commercial energy management solutions — grew in absolute terms by 11 percent to 61, making it the number one area of cleantech deal activity. The energy efficiency category share of total financing activity in 2009 rose from 24 percent to 32 percent. At the same time, the share of financing rounds directed to the more capital intensive energy/electricity generation category fell from 30 percent to 18 percent. Similarly, the share of deals going to alternative fuels declined from 13 percent to 8 percent.
Ernst & Young said the energy efficiency category received the most U.S. VC investment in Q409, with $252.8 million and 22 deals, compared to $133.7 million and 14 deals in Q309. This category raised $593.3 million for all of 2009. The largest deal of Q409 in energy efficiency — and across all cleantech segments — was the $105.0 million investment in Silver Spring Networks Inc, a provider of networking infrastructure and services for smart grids, based in Redwood City, Calif.
The energy/electricity generation category garnered $118.5 million with 11 deals in Q409, down from the $316.5 million invested in 8 deals in the prior quarter; $654.6 million was invested in this category in 2009. The largest deal in Q409 was the $38 million raised by Nordic Windpower Holdings Inc., based in Berkley, Calif.
The industry focused products and services category raised $76.7 million in Q409 with 11 deals and $608 million throughout 2009. The funding in this segment was led by the transportation industry, which raised $33.8 million in Q409 and $362.7 million for the year, propelled by investments such as the $82.5 million in the electric car company Tesla based in San Carlos, Calif. According to a recent study conducted by Ernst & Young’s Global Automotive Center, over 10 percent of U.S. drivers — or approximately 20 million people — would consider purchasing a plug-in hybrid or electric vehicle.
The U.S. government continues to serve as an influential cleantech investor, the report said. Under the Section 48C Advanced Energy Manufacturing Tax Credit of the American Recovery and Reinvestment Act, $2.3 billion was recently awarded to 183 cleantech manufacturing projects in 43 states. An Ernst & Young analysis of these awards shows that venture-backed projects received $402 million in awards. President Obama’s 2011 budget proposal would provide an additional $5 billion appropriation for the Section 48C program, offering further support for cleantech development.
The U.S. Patent and Trademark Office is supporting government commitments to cleantech solutions by accelerating its examination of certain “green” technology applications to reduce the time required to patent these technologies by an average of one year.
Large corporations are quickly adopting clean technologies to create a competitive advantage through resource efficiency, sustainable growth and cleantech-driven revenue opportunities. In a recent Ernst & Young study of executives at global corporations with revenues in excess of $1 billion, over 50 percent of respondents indicated their companies’ intentions to spend at least $10 million on cleantech products and services by the end of 2010, with 22 percent predicting a cleantech spend of at least $100 million.
U.S. public market investment in clean energy totaled $2.8 billion in 2009, according to Bloomberg New Energy Finance. With capital markets showing signs of improvement, three cleantech companies recently filed to raise up to $500 million in initial public offerings, according to Thomson Reuters. The largest transaction is expected to be the offering by Solyndra, Inc., which anticipates raising $300 million.
Cleantech merger and acquisition activity reached 53 transactions in the U.S., with a disclosed value of $3.5 billion, according IHS Herold. Nearly half of this activity took place in Q4 2009, which saw 22 transactions with a disclosed value of $1.7 billion. One notable fourth quarter deal is the acquisition of Clipper Windpower by United Technologies Corporation for $327.4 million.