Venture Capital Growing Again in Clean Energy and Clean Technology (GE, DGW, BWEN)

It seems that venture capital has started to reappear in clean energy and clean technology.  A report this week from The Cleantech Group with contributions from Deloitte saw a resumption to growth in venture investing after two quarters of decline. The funding  seems focused on electric vehicles and in biofuels, but interestingly enough the investments into solar hit a new low.  We have long maintained after watching solar stocks that they may be nothing more than a highly leveraged bet on the price of oil as far as publicly traded companies are concerned.

The outcome was funding in 94 companies receiving roughly $1.2 billion in total spread out in North America, Europe, China and India.  This would represent a gain of 12% from the prior quarter, but is still down a sharp 44% from a year ago.  The average round size was up roughly 5% over the prior quarter to $12.9 million.

All of this matters to the investing public because this is what leads to new IPO’s, mergers, partnerships and more.  Much of this data also coincides with what we seen in the public capital markets as well.

There is some outside help that is adding to this effect.  Noted were solar tax equity, increased M&A levels, billions of dollars in global government stimulus, and new climate and energy legislation.

The investments into solar ventures are down dramatically, but utility investments in cleantech is up.  If you want to know how this compares from private to public, we made an observation that many public solar companies  raised millions and millions via secondary offerings and other financing activities during the second quarter after their shares had recovered so much from the lows.

The report noted that solar saw its lowest level of investment in more than three years with $114 million invested.  That is down from a high of $1.2 billion invested in the Q3 period in 2008.  This actually does coincide with an observation in public companies.  There was an increase in short selling in the solar sector at the latest report.

24/7 Wall Street has its own look on what it keys off of, so if you want to see the full report from The Cleantech Group you can see its full report here.

The largest interest here is transportation—specific investing in vehicles, biofuels and advanced batteries as some $236 million went into vehicles:

• San Diego startup V-Vehicle has raised $100 million to date from Kleiner Perkins Caufield & Byers and T. Boone Pickens to build a fuel-efficient car in Louisiana;
• EV manufacturer Fisker Automotive, which raised $85 million from Eco-Drive Partners and Kleiner Perkins to fund development and manufacturing of its Karma plug-in hybrid;
• Norwegian EV startup Think Global which raised $39 million;
• Israel’s ETV Motors which raised $12 million from Quercus Trust to develop an electric powertrain.

Some $206 million went into Biofuels:

• agri.capital, a European developer of biogas plants, which raised $82 million from TCW Group and others;
• renewable oil producer Solazyme, which raised $57 million from Braemar Energy Ventures, Lightspeed Venture Partners and VantagePoint Venture Partners.

Some $165 million went into Advanced Battery technologies:

• lithium-ion start-up A123, which raised a $100 million round led by General Electric Co. (NYSE: GE) and others;
• Deeya Energy, which raised $30 million from Technology Partners and others to develop its redox flow batteries.

The Cleantech Group also noted that mergers and acquisitions were strong as well with some 138 transactions in the quarter.  It noted that totals were disclosed for 40 transactions coming to a grand sum of $12.2 billion.  The total was up some 291%, but the deal count was up by almost one-third from the prior quarter.

The IPO market is still somewhat dark.  The report noted that China Metal Recycling began trading on the Hong Kong Futures Exchange and Duoyuan Global Water Inc. (NYSE: DGW) listed on the NYSE. One note on a transfer of listing was Broadwind Energy, Inc. (NASDAQ: BWEN), which moves to the NASDAQ from the OTC market in April.

North America still rules the roost.  Some 66% was in North America, with Europe and Israel seeing 21%.  India was 11% and China was a mere 1%.  Cleantech gave a list of the most active investors in the second quarter:

• Kleiner Perkins Caufield & Byers had 5 rounds with companies such as Agnion Energy, Ausra, Fisker Automotive, V-Vehicle, and Zettacore.
• Khosla Ventures had 4 rounds with companies such as Ausra, Cello Energy, HCL Clean Tech, and Transonic Combustion.
• Braemar Energy Ventures had 4 rounds with companies such as Fulham, Nuventix, OPX Biotechnologies, and Solazyme.
• Robeco Alternative Investments had 3 rounds with companies such as AWS Eco Plastics, EPS Corporation, and Turbine Air Systems.
• Draper Fisher Jurveston had 3 rounds with companies such as Glycos Biotechnologies, Deeya Energy, and Zettacore.
• VantagePoint Venture Partners had 3 rounds with companies such as Alertme, Solazyme, and Tendril Networks.

The Cleantech Group and Deloitte will review their second quarter findings in a live webinar next week on July 7, 2009 at 11:00 AM EST for its members.  That is closed to its members but can be found at http://www.cleantech.com.

The Cleantech Group is a group we have followed because it has a rather large specific network of investors, entrepreneurs, enterprises, and service providers.  It also focuses on many new and emerging “clean-tech” issues that may hold keys to tomorrow’s clean energy and clean technology.

Jon C. Ogg
July 3, 2009