02 February 2011

US Venture Capital in Cleantech Grows to Nearly $4B in 2010

US venture capital (VC) investment in cleantech companies increased by 8 percent to $3.98 billion in 2010 from $3.7 billion in 2009 and deal total increased by 7 percent to 278, according to an Ernst & Young LLP (E&Y) analysis based on data from Dow Jones VentureSource.

According to the analysis released today, VC investment in cleantech in Q4 2010 reached $979 million with 72 financing rounds, flat in terms of deals and down 14 percent in terms of capital invested compared to Q4 2009.

Solar, consumer products and building materials, and electric vehicles and charging stations led the way in 2010.

Two trends that E&Y spotted are worthy of note because they contradict some of what we've heard on the street concerning energy efficiency and seed investing.

  • VC investment in the energy efficiency segment dropped 9 percent from 2009 to 2010, to $688.99 million through 68 deals.  In Q4 2010, 17 deals were completed in the segment, attracting $196.63 million, a 41 percent decrease from Q4 2009. 
  • Seed rounds accounted for a large number of deals, 18, for 2010, a 125 percent increase in comparison to eight seed round deals in 2009. The share of investment dollars going to second rounds increased from 18 percent in 2009 to 26 percent in 2010. Later stage deals received $2.37 billion or 62 percent of the money invested in this period.

Ernst & Young considers "cleantech" to encompass "a diverse range of innovative products and services that optimize the use of natural resources or reduce the negative environmental impact of their use while creating value by lowering costs, improving efficiency, or providing superior performance."

SOURCE: Ernst & Young

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