US venture capital investments in cleantech, as with VC overall, dropped sharply in Q1 09 after a record year in 2008, according to an Ernst & Young analysis based on data from Dow
US venture capital investments in cleantech, as with VC overall, dropped sharply in Q1 09 after a record year in 2008, according to an Ernst & Young analysis based on data from Dow Jones Venture Source.
The USD277m raised in 24 deals in Q1 09 represents a 63 per cent decrease in terms of capital and 48 per cent decline in deals compared to Q1 08.
"Despite the intense challenges of raising capital during the past four months, government initiatives and corporate commitments are points of light for cleantech companies," says Joseph A. Muscat, Americas director of cleantech, Ernst & Young. "While the timing of the receipt of government funding is uncertain, we expect that loan guarantees and other government financing structures, as well as corporate adoption rates of clean technologies, will be early indicators of an upward investment cycle."
Despite an overall down quarter, the energy storage cleantech segment more then doubled the USD50m raised in Q1 08 to USD114m in Q1 09, making it the largest category of investment last quarter.
Battery storage companies raised USD69m in the first quarter, a 37 per cent jump from Q1 08. Fuel cell companies did not follow far behind. They raised USD45m in Q1 09 compared to no investment in Q1 08. Battery manufacturer A123 Systems, a lithium ion battery supplier from Watertown, MA, completed the largest cleantech deal this quarter with USD69m infusion.
Energy/electricity generation, the quarter’s next-largest investment category, raised USD56m in Q1 09, a 73 per cent decrease compared to Q1 08. Solar companies accounted for the majority of activity in this category, raising USD48m.
Despite the difficult economic conditions, significant cleantech deals were closed across transaction categories. New Energy Finance recorded 28 completed asset financings in the US last quarter with a disclosed value of USD1.3bn. This figure includes SunEdison’s USD20m tax equity project financing from Union Bank of California. NEF also tracked ten private equity deals with a disclosed value of USD369m.
Additionally, there were 18 US M&A transactions that raised USD1bn, which included San Antonio-based, Valero Energy’s acquisition of three biofuel entities for a total of USD477m, according to J.S. Herold.
Corporate commitments to cleantech continued through a challenging quarter. For example, Google and Google.org announced a prototype software of Google PowerMeter, a consumer home smart grid application that is targeted for completion by the end of 2009.
"This economic climate demands that cleantech companies think more creatively about resources and partnerships, as government becomes an increasingly important constituent in the cleantech market," says Muscat.
Government funding has begun to enter the market as a Department of Energy grant was recently rewarded to Fremont, California-based Solyndra, a cylindrical photovoltaic systems manufacturer that plans to use the USD535m loan to expand its solar panel manufacturing capacity in California. More substantial funding is coming with the US American Reinvestment and Recovery Act, which contains over USD100bn of dollars in direct spending, loan guarantees and incentives to promote the development of cleantech in energy, water and environment.
