Venture capital investments in cleantech companies bucked the trend in 1Q08, growing by 18%, while overall U.S. venture capital declined 7% to $6.5 billion, according to newly released figures.
Capital invested in cleantech grew by 18% to $571.6 million in 1Q08 compared to $483.9 million for the same period in 2007, according to an Ernst & Young report based on data from Dow Jones VentureOne. However, the number of deals declined by 11% to 34.
Three cleantech industry groups accounted for the majority of the capital invested in the quarter. The Alternative Fuels group was the largest recipient of capital with $178 million invested-31% of the quarterly industry total.
Energy/Electricity Generation group’s investments represented 26% of the cleantech industry and totaled $148.3 million.
Energy Efficiency group deals accounted for 20% of investment, netting $116.4 million for the quarter.
Cleantech investing also suggested that the industry is maturing as deal volume shifted from early stage financings to later stage investments this quarter. Early stage deals, largely seed and first round investments, accounted for 37% of cleantech financings in 1Q08, down from 51% in 1Q07, but represents a consistent percentage of the total venture capital industry investments directed toward early stage enterprises.
Conversely, later stage deals accounted for 43% of financing rounds, up from 24% in 1Q07, reflecting the progress of technology development in existing cleantech companies.
Fastest growing segments
The Energy Efficiency group contained two of the fastest growing segments this quarter. Year-on-year, capital invested in Power and Efficiency Management Services increased 454% to $66.5 million. The Efficiency Products segment grew by 148% to $49.5 million. BridgeLux, a provider of energy saving power-LED chips based in Sunnyvale, CA, raised $40 million in the largest Energy Efficiency deal of the quarter.
Investments in the Solar segment, part of the Energy/Electricity Generation group, also grew by 136% over the last year to $132.4 million. A key deal in the solar category was Infinia, a concentrated solar company based in Kenniwick, WA that raised a $57 million round during the quarter.
"While solar and biofuels investments continue to grow, we’re observing increased investments in efficiency-related technologies as VCs balance their renewable energy portfolios with companies that have a shorter prospective time to exit," said Joseph Muscat, Americas Director of Cleantech and Venture Capital, Ernst & Young LLP. "Efficiency technologies are less capital intensive than renewables, which enable more venture capitalists to participate in the cleantech industry," Muscat continued.
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