Clean Tech Investments Still Strong

Investors Are Still Flocking To The Green Energy Sector.

Global investment in clean technology and renewable energy companies by venture capital and private equity funds topped $5 billion in the second quarter of this year. While this is a slight drop - 4 percent - from January-March, the amount is 45 percent above the corresponding period last year.

That's according to a report from VB/Research "CleanTech & Renewable Energy Review" for the second quarter of 2010.

"The market lacks pre-credit crunch exuberance but has recovered significantly from the moribund levels of 2009," said report author and VB/Research CEO Douglas Lloyd.

Venture capital (VC) accounted for 43 percent of total investment ($2.2 billion) this quarter, similar to the first quarter of this year. There was a pronounced shift in the way VC was invested: early-stage VC investment declined by 31 percent while late-stage VC investments surged by 63 percent, according to the report.

Europe bucked the trend with a 40-percent rise in the recent quarter, with two deals accounting for $100 million. But the interesting part in the United States is the effect government support for a clean energy project had on the private capital markets. That's a point clean energy advocates make every chance they get.

In this case, large-scale solar developer BrightSource Energy Inc. raised $150 million of funding within weeks of securing $1.37 billion of loan guarantees from the U.S. Department of Energy in February.

Development capital and buyout investment in the second quarter increased by 33 percent and 52 percent, respectively, compared to the corresponding period last year. Corporate VC activity remained robust with corporations, utilities and industrial groups including Alstom SA, Total SA, Israel Corp., GE Capital and Intel Capital Corp., investing in 26 companies through their venture capital divisions.

But the investors seem to be more selective, according to Lloyd. "The main beneficiaries of this upturn are more mature companies seeking late-stage VC funding or development capital, particularly those that have received government support," he said.

And with the way government support has been doled out this year, that trend may continue.

Article by Bill Opalka Courtesy of RenewableBiz.com