Cleantech Venture Investment Reaches Record of $2 Billion in 2Q08

SAN FRANCISCO--(BUSINESS WIRE)--The Cleantech Group™, founders of the cleantech investment category and providers of leading global market research and investment services to its members, today announced 2Q08 results for cleantech venture investments in North America, Europe, China and India, totaling $2.0 billion across 96 companies, an all-time record quarter. The previous record quarter was 3Q07, which saw $1.8 billion of cleantech venture investments.

The 2Q08 total is a 58 percent increase over the same period a year ago, and 48 percent over 1Q08. This quarter’s growth in cleantech venture investments contrasts with a projected decline in overall venture investments during the same period.

“Interest in cleantech continues to show robust growth, despite the impact of economic headwinds and continued credit market constraints,” said John Balbach, Managing Partner, Cleantech Group, LLC. “The combination of a strengthening pipeline of promising new innovations, steady progress in scaling growth-stage companies and improving demand-side pull are leaning towards 2008 outperforming the banner 2007 record performance.”

Investments in solar technologies and second-generation biofuels, including concentrated solar thermal and algae companies, primarily drove the 2Q08 results:

• SOLAR THERMAL: Unlike solar photovoltaic technology, which directly converts sunlight into electricity, solar thermal concentrates the sun’s heat to turn water into steam, powering a turbine. Solar thermal is a utility-scale technology designed to competitively generate gigawatts of clean electricity. Solar thermal companies eSolar, BrightSource Energy, SkyFuel, Infinia and Sopogy raised a total of $278 million in venture capital in 2Q08. Combined with the $100 million acquisition of Stirling Energy Systems by NTR plc and the $165 million in venture capital raised by Solel, Infinia and eSolar in 1Q08, solar thermal companies have raised, year-to-date, $543 million.

• SECOND-GENERATION BIOFUELS: While recent increases in grain prices have created controversy over first-generation biofuels, second-generation biofuel companies, which do not rely on food crops as a feedstock, continue to receive large amounts of venture capital. Second-generation biofuel companies Range Fuels, Sapphire Energy, EdeniQ, Mascoma, Aurora BioFuels, Gevo, Fulcrum Bioenergy, Greenline Industries, GreenFuel Technologies and Amyris Biotechnologies raised a combined $280 million in venture investment in 2Q08. Of this total, $136 million was invested in cellulosic ethanol startups and $84 million in algae biomass startups, including a $50 million round for Sapphire Energy—the single largest round ever raised by an algae company.

“For the first time, algae companies are attracting large, follow-on investment rounds—a trend we expect to continue into the second half of the year,” said Brian Fan, Senior Director of Research for the Cleantech Group. “This breakout quarter for solar thermal and algae companies indicates a growing appetite for clean technologies that can replace coal for electricity generation and oil for transportation fuels.”

NORTH AMERICA:

U.S. companies received a record $1.49 billion in 54 financing rounds, accounting for approximately 74 percent of the total. California-based companies received approximately 40 percent of cleantech investments, with a record $794 million in 21 investments. Canadian companies received $40 million in two investments.

EUROPE:

European companies (including Israeli companies) recorded $257 million in 31 disclosed financing rounds, accounting for approximately 13 percent of the total. The amount invested in European companies was the lowest for three quarters, due to a drop-off in the number of large energy generation deals. 2Q08 investments still represent a 37 percent increase from the same period a year ago. UK companies received the most capital with $86 million invested in 17 companies.

CHINA and INDIA:

Chinese companies raised $235 million in venture capital across six rounds, accounting for approximately 12 percent of total. The largest single investment was $100 million in growth capital financing for Yingbin Nature, a sustainable forestry product company. Interestingly, Chinese cleantech-related investment funds raised over $6.9 billion during the quarter, reflecting strong potential for future growth in the Chinese cleantech sector.

Indian companies raised $11.1 million in venture investments across three rounds, accounting for approximately 0.6 percent of the total. This was principally driven by a $10 million investment in Emergent Ventures, a Clean Development Mechanism (CDM) consulting company. The two other investments were in clean water technologies.

TOP INVESTORS:
2Q08 Top Five Cleantech Venture Funds
Venture Capital Firm		# of rounds		Companies
Kleiner Perkins Caulfield & Byers		5		Segway, Lehigh Technologies, Amyris Biotechnologies, Verdiem, Jiangxi Tianren Ecological Industry Co.
Foundation Capital		4		Control4, Silver Spring Networks, eMeter, SunRun
Quercus Trust		4		Firefly, Standard Renewable Energy, Sencera, Hydro Green Energy
Khosla Ventures		4		Amyris, Gevo, Firefly Energy, Range Fuels
Draper Fisher Jurvetson		3		Brightsource Energy, EdeniQ, GreenFuel Technologies
		Source: Cleantech Group (cleantech.com)

M&As and IPOs:

Cleantech M&A totaled an estimated 43 transactions in 2Q08, of which totals were disclosed for 23 transactions totaling $4.2 billion. This is down from the 44 transactions in 1Q08, of which 20 were disclosed, totaling $6.4 billion. The largest M&A in 2Q08 was LBO France’s $3.1 billion purchase of equity in Converteam Group SAS, a power optimization infrastructure company. India’s Suzlon Energy acquired Areva’s 30 percent stake in RE Power for $540 million, and First Reserve Corp. acquired Gamesa Solar for $395 million. Aligned with the solar thermal focus in 2Q08, NTR plc took a 51 percent stake in Stirling Energy Systems for $100 million.

Cleantech IPOs increased to six IPOs, worth $4.4 billion, up from a low of four IPOs worth $108 million in the previous quarter. The largest IPO was EDP Renovaveis SA on Euronext, which raised $2.4 billion. Euronext had two cleantech IPOs, while the AMEX, NASDAQ, Frankfurt and NYSE each had one.

Key Takeaways Reviewed in Webinar Today:

The Cleantech Group will review key findings of its 2Q08 data in a live webinar today at 11AM EST / 8AM PST, exclusively for members of the Cleantech Group’s Cleantech Network. Network members may join the live meeting at http://cleantech.acrobat.com/w2q08/ a few minutes before 8AM PST, and will need their email addresses and Cleantech Network password to log in. Members unsure of their passwords can contact Cleantech Group at +1 810-224-4310 x.7151.

About the Cleantech Group, LLC

The Cleantech Group pioneered the cleantech investment category in 2002. Today, it accelerates the development and market adoption of clean technologies globally through membership in the largest global network of investors and companies representing more than $3 trillion in assets. Member investors, growth companies/vendors, enterprises, service providers, and others receive access to capital, investment deal flow, market leading research and data, insight, sales leads, human capital, and promotional opportunities. The Cleantech Group also produces the premier Cleantech Forum events worldwide. Details at http://www.cleantech.com.