Intelligent Energy

The state of cleantech funding

The state of cleantech funding

Posting in Energy

Cleantech Group's quarterly numbers are out and it's not looking good. The IPO window has shut and VC investment has dropped. But is it all bad? There may be a few bright spots in cleantech after all.

Venture capitalists -- often the only sources of funding for startups -- invested $1.61 billion into cleantech companies in the second quarter, marking a 14-percent decline from the first quarter and a 25-percent drop from the same period last year, according to a report by Cleantech Group.

Early-stage cleantech startups saw the fewest funds, a strong hint that venture capitalists are seeking out more established companies. Cleantech Group recorded 155 deals in the second quarter compared with 197 in the first quarter. Of these deals, 59 percent were Series B or later rounds, accounting for 90 percent, or $1.59 billion, of all money invested during the quarter, Cleantech Group said.

Despite the overall gloomy results, Cleantech Group CEO Sheeraz Haji said top-tier funs such as Khosla Ventures, Kleiner Perkins and NEA are still actively investing in cleantech.

Haji also noted in both a statement and during a media conference call, that while not all cleantech companies in North America have been labeled as such, there's still considerable growth in technologies that tackle resource efficiency and energy (aka cleantech).

IPO blues

The report also confirmed the abysmal conditions for companies, at least North American ones, to go public. Three North American venture-backed IPOs were pulled in the second quarter citing poor market conditions, including solar company BrightSource Energy, biofuel company Enerkem and Luca, which makes bio-based methane conversion technologies. All nine cleantech IPOs were China-based companies.

Solar stays flat, water gains ground

Overall, the percent of dollars spent was spread out among the top eight sectors: solar, biofuels, transportation, air & environment, energy efficiency, water, recycling & waste and materials.

VC investments in solar stayed flat in the second quarter. However, solar attracted enough VC to lead the quarter with $253 million, followed by transportation with $252 million and energy efficiency with $243 million.

Water companies closed the first half of the year with $284 million in VC investment. Water companies that specialized in desalination and other industrial applications dominated the list and helped make this the largest first half, in terms of VC dollars invested, in four years.

Top solar deals:

  • California-based solar developer SunRun raised $60 million;
  • Nanosolar, the thin-film solar cell maker that uses nano-ink printing technology, raised $50 million, bringing the total of its latest round to $70 million;
  • SolarBridge Technologies, which develops module-integrated microinverter solutions for solar PV, raised $25 million.

Other notable deals:

  • Fisker Automotive raised $129 million as part of its $500 million Series D round;
  • Soladigm, which develops energy-efficient glass technologies for buildings, raised $55 million;
  • SunSun Lighting, a China-based maker of LED lighting products, raised $30 million.

Photo: SunEdison; Graphics from Cleantech Group


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Kirsten Korosec

Contributing Editor

Kirsten Korosec has written for Technology Review, Marketing News, The Hill, BNET and Bloomberg News. She holds a degree from Northwestern University's Medill School of Journalism. She is based in Tucson, Arizona. Follow her on Twitter. Disclosure