The venture capital (VC) industry demonstrated its commitment to the clean technology space in the second quarter of 2009, pumping $1.2 billion into the sector, according to a report by GTM Research. VC investments in cleantech are up 43.5% from the first quarter of the year, when $836 was put into play in the cleantech space.
The number of transactions increased, as well. In the first quarter, 59 deals were completed, and deal-flow surged 44% to 85 in the quarter just finished. Average deal size remained fairly consistent: $14.2 million for the first quarter and $14.1 for the second.
Solar power led an aggressive VC pace for the cleantech space. Of the $1.2 billion invested last quarter, it got $330 million (27.5%), followed by automotive at $202 million (16.8%), and energy storage at $180 million (15%). The traditional analysis of potential upside is supplemented by the likelihood of stimulus benefits as an additional source of (nondilutive) capital, extending the value of VC cash infusions.
Ira Ehrenpreis, general partner, Technology Partners, sees the "balanced balanced distribution of sectors that attracted capital underscores cleantech's breadth and diversity of opportunity, one of the key drivers behind why cleantech remains an enduring area."
In the most recent quarter, mid-stage investment was difficult to attain, with the size of the average rounds a bit lower than in previous quarters. Early- and late-stage investments, on the other hand, were easier to complete. The super-sized $100 million and up deals involving solar power and biofuel were noticeably absent.
The balance of the year, it seems, will be focused on consolidating the industry and developing a foundation for growth, with the liquidity events coming in 2010 and 2011, according to Eric Wesoff, senior analyst at GTM Research. "Expect to see IPOs and acquisitions of VC-funded firms in solar, smart grid, green buildings, and biofuels,"he forecast.
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