US venture capital (VC) investment in cleantech companies increased by 8% to USD3.98 billion in 2010 from USD3.7 billion in 2009 and deal total increased by 7% to 278, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource.
VC investment in cleantech in Q4 2010 reached USD979 million with 72 financing rounds. VC investment in cleantech in Q4 2010 reached USD979 million with 72 financing rounds, flat in terms of deals and down 14% in terms of capital invested compared to Q4 2009.
"In comparison to the early days of cleantech, the 2010 US VC investment results reflect a turning point in the industry due to improving credit and capital markets, the deployment of stimulus spending and increasing corporate cleantech adoption," says Jay Spencer, Ernst & Young LLP’s Americas Cleantech Director.
The Energy/Electricity Generation segment raised USD1.32 billion in 2010, the most VC funding for the year, which was largely attributed to investments in follow-on solar deals and a second generation of solar companies. Investments in solar in 2010 increased by 77% to USD1.58 billion. In Q4 2010 solar investments reached USD279.17, an increase of 129% compared to the same period last year. The largest deal for all of Q4 2010 was completed by Abound Solar, a Fort Collins-based provider of photovoltaic modules, which raised USD111.18 million. Another notable deal in this segment: a solar cell developer, SoloPower Inc. of San Jose, CA, raised USD51.57 million.
The Industry Products and Services segment completed 2010 with a 179% quarter on quarter growth and a 79% year on year increase due to significant investments in the transportation and materials segments, as well cleantech developments for the consumer products and construction industries. The segment raised USD1.24 billion through a total of 80 deals in 2010 and USD355.84 million in the fourth quarter, including two of the largest deals in Q4 2010: Elevance Renewable Sciences Inc., of Bolingbrook, IL, a provider of specialty chemicals derived from natural oils, raised USD100 million and SAGE Electrochromics Inc. of Fairbault, MN, a provider of electrochromic smart window products, raised USD80 million. Investments in electric vehicles (EV) and charging stations generated 56% (USD695.17 million) of investment in this category in 2010 due to large deals completed by three EV manufacturers: Better Place, Fisker Automotive; and Coda Automotive, Inc.
"Electric vehicles are bringing the strands of cleantech together as companies begin to address opportunities that will arise from the growth of the new consumer and commercial markets. These companies are from industries such as: utilities, big box retailers, rental car and battery storage," says Spencer. "For example, Panasonic recently announced a USD30 million investment in electric vehicle company, Telsa Motors."
VC investment in the Energy Efficiency segment dropped 9% from 2009 to 2010, to USD688.99 million through 68 deals. In Q4 2010, 17 deals were completed in the segment, attracting USD196.63 million, a 41% decrease from Q4 2009. The largest Energy Efficiency deal in Q4 2010 was closed by OPOWER, Inc, of Arlington, VA, an energy consumption technology provider, which raised USD50 million.
In addition to sub-sector trends, 2010 US cleantech investment was marked by a resurgence of seed round investment. Seed rounds accounted for a large number of deals, 18, for 2010, a 125% increase in comparison to eight seed round deals in 2009. The share of investment dollars going to second rounds increased from 18% in 2009 to 26% in 2010. Later stage deals received USD2.37 billion or 62% of the money invested in this period.
Growth in the US cleantech market in 2010 was further evidenced by three venture-backed cleantech IPOs –- compared to one in 2009. These 2010 deals were completed by Amyris, Tesla Motors and Codexis, Inc.
Additionally, in Q4 2010, 17 US M&A transactions, valued at USD358.5 million, were completed, according to IHS Herold. The largest transactions of that group were in the renewable space. United Technologies acquired Clipper Windpower for USD221.6 million and Atlantic Power Corp. acquired Cadillac Renewable Energy, LLC for USD77 million. On the corporate side, Exelon Corp. revealed plans to invest nearly USD5 billion through 2015 on clean energy and efficiency projects.
At the federal government level, the USD858 billion tax-cut bill recently signed by President Obama will extend grants for renewable energy projects for a year, a potential boost for developers seeking financing. California legislators further set the stage for significant cleantech investment and adoption. The state’s regulators approved a rule that would require utilities to get a third of their power from renewable sources by 2020, the most ambitious standard in the US.
The western US, lead by California, continued to dominate national cleantech investment in 2010. The Mountain Region, Pacific Northwest and California collectively completed 154 deals equaling USD2.76 billion in 2010. The North east, Mid-Atlantic and South east regions of the US jointly secured 74 deals, which amounted to USD625.79 million.
