Venture capitalists invested a record $3 billion in 221 "clean technology" deals worldwide in 2007, a 43% increase over the $2.1 billion invested in 173 similar deals in 2006, according to an annual survey of the industry.
The U.S. is the driving force behind the sector’s rapid rise, accounting for 83% of global clean technology investment in 2007, according to the report, released by Dow Jones VentureSource.
The U.S. saw $2.52 billion invested in 159 cleantech deals, a 79% increase in investment over 2006, while cleantech accounted for more than 8% of total U.S. venture capital investment in 2007 and received roughly the same capital outlay as the entire business/consumer/retail industry.
"Clean technology is no longer wishful thinking. With record-high fuel prices, ongoing debate over carbon emissions, and the potential for favorable legislation following this fall’s election, investors recognize that the time is ripe for innovation and investment in this area," said Jessica Canning, Director of Global Research for Dow Jones VentureSource.
"The energy industry is so massive that any slice of it can produce substantial returns to the investor, regardless of if they’re targeting the consumer or enterprise," Canning added.
The largest U.S. cleantech deal of 2007 belonged to the Palo Alto, Calif.-based Project Better Place, which raised $200 million in its first round of funding to develop a market-based transportation infrastructure for electric vehicles.
In Europe, where Spain, Germany and others have long been on the forefront of cleantech implementation, cleantech investment also reached a new record in 2007 as venture capitalists invested approximately $360 million in 56 deals. This marks a 27% increase in capital investment over 2006, despite deal flow being virtually unchanged from the prior year. The data shows that, overall, Europe accounted for 12% of global cleantech investment in 2007. The largest cleantech financing in Europe in 2007 was the $67 million second round for electric carmaker Think Global of Oslo, Norway.
It was a different story in China, the report found. The region, which saw record cleantech investment totaling $424 million in 2006, only saw six deals completed and $129 million invested in 2007, accounting for just 4% of global cleantech investment. However, China did see four venture-backed cleantech complete initial public offerings in 2007, generating some $821 million in liquidity.
"What’s really encouraging is that the cleantech industry is still in its infancy in the U.S.," said Ms. Canning. "In fact, our data shows that 59% of all U.S. investment in the sector is going toward companies in the product development phase, which suggests that funding for clean technologies is likely to continue as these companies continue to develop and start generating revenues."
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