Cleantech venture investments in North America, Europe, China and India totaled $2.6 billion in 3Q08, setting an all-time record quarter, according to a new report.
The 3Q08 total is a 37% increase over the same period a year ago, and 17% increase over 2Q08, according to The Cleantech Group. Cleantech venture investments through 3Q08 now total $6.6 billion, exceeding the full-year 2007 total of $6.0 billion.
"Cleantech venture investing has continued to show strong growth despite the unprecedented turmoil in the credit markets during the quarter," said Michael Goguen, Managing Partner, Sequoia Capital and co-chair of the North American advisory board of the Cleantech Group’s Cleantech Network, the largest global network of cleantech investors and companies. "In the coming quarters, we could foresee large scale cleantech projects having to work harder to get financed. However, the capital efficient, early-stage companies addressing the inefficiencies of existing markets should see continued venture financings."
Highlights from the quarter include an all-time high for smart grid companies, algae companies, and thin-film solar companies:
— SMART GRID: Smart grid companies raised a record $202 million in 3Q08, led by Gridpoint, which raised $120 million, Trilliant at $40 million, BPL Global at $23 million, and Eka Systems at $18.5 million. By comparison, over the past 10 quarters, smart grid companies raised slightly under $30 million per quarter.
— ALGAE: Following a record 2Q08 which saw $84 million in investments in algae, 3Q08 saw over $95 million in investments. Sapphire Energy raised at least another $50 million while Solazyme raised over $45 million.
— THIN-FILM SOLAR: Thin-film startups raised a staggering $620 million in investments in 3Q08. CIGS (copper-indium-gallium-selenide) startups raised the most capital, including SoloPower at $200 million, OptiSolar at $78 million, and Miasole at $35 million, while German CIS (copper-indium-sulfide) provider Sulfurcell Solartechnik raised $134 million. AVA Solar, a competitor to First Solar in the cadmium telluride space, raised $104 million, while UK-based G24 Innovations raised $30 million for its flexible organic dye thin film technology.
"The impending production of electric vehicles by major manufacturers, which will require utility companies to improve the electrical grid to manage plug-in vehicles, has spurred investment in smart grid companies," said Brian Fan, Senior Director of Research for the Cleantech Group. Fan added, "We have seen the arms race in thin-film solar reach new heights, and now we are seeing it in the algae sector, as investors funnel ever-increasing amounts of capital to companies that have not yet successfully scaled up commercial production. Investors are doubling down to maximize the probability that their portfolio companies can keep up with competition and become winners in their respective markets."
EUROPE
The amount invested in European companies was the highest ever recorded for a single quarter. European companies (including Israel) received $742 million in 46 disclosed financing rounds, or 28% of the global total. Sectors in Europe which advanced this quarter include thin-film solar and wind.
NORTH AMERICA
U.S. companies received a record $1.75 billion in 77 financing rounds, accounting for 67% of the global total. California-based companies received approximately 42% of cleantech investments, with a record $1.1 billion in 35 investments. Canadian companies received $49 million in six investments.
CHINA and INDIA
Chinese companies raised $111 million in venture capital across seven rounds, accounting for approximately 4% of the global total. The largest single investment was in Feida PV Co., Ltd., which produces solar cells and modules. Investments in solar companies accounted for more than half of the investments made in China.
Indian companies raised $6.3 million in venture investments across two rounds, accounting for approximately 0.2% of the total. The only disclosed deal in India this quarter was raised by Attero Recycling, an e-waste management and recycling company.
M&As and IPOs
Cleantech M&A totaled an estimated 138 transactions in 3Q08, of which totals were disclosed for 56 transactions totaling $17.6 billion. This is an all-time high in cleantech M&A, and is a significant increase from the 43 transactions in 2Q08, of which 23 were disclosed, totaling $4.2 billion. In 3Q08, five transactions hit the $1 billion level, including Iberdrola’s acquisition of Energy East, estimated at $4.6 billion, and International Power Plc’s acquisition of Trinergy Ltd for $2.5 billion.
However, cleantech IPOs decreased to four IPOs, worth $587.1 million, down from six IPOs worth $4.4 billion in the previous quarter. The largest IPO was GT Solar, Inc. on Nasdaq which raised $500 million. The NASDAQ saw two cleantech IPOs, while the Toronto Stock Exchange and AIM each had one.
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