CleanTech Cleans Up Investment

Investors are betting big on cleantech. In the first quarter of 2010, companies raised more than $1.9 billion globally in 180 deals, a new high, according to a report released last week by the Cleantech Group and the accounting firm Deloitte.

Investment leaped 29 percent from the fourth quarter of 2009 and 83 percent from the same period a year ago, with both venture capitalists and big corporations (among them Royal Dutch Shell and General Motors) showing an interest.

But while the number of deals set a new record — the previous peak was 165 deals in the fourth quarter of 2009 — the total value is still $1 billion off the high, which was in the third quarter of 2008, and the deals are much smaller in size.

"The first three months of 2010 represent the strongest start to a year we have ever recorded," Sheeraz Haji, president of the Cleantech Group consultancy, says about the deal volume. But the environment is still tough for many cleantech companies. "You have less dollars per deal going into startups, and plenty of big companies are struggling to raise the capital they need."

Investors were sweet on the transportation sector, in particular electric vehicles. A $350 million investment in Better Place, a Palo Alto-based company that is building a network of charging stations for electric cars in Australia, California, Canada, Denmark, Hawaii and Israel, lifted transportation to a record quarter: $704 million in 27 deals. Two other California start-ups – Fisker Automotive and Coda Automotive – picked up $140 million and $30 million, respectively.

Why the interest in transportation, which requires huge outlays of cash? It's cooler, Haji told the Daily Finance. "People are watching exactly where Nissan's lease price is at," he said, referring to the company's pricing of its Leaf electric car. "There's anticipation that there's a market there."

The solar sector recorded $322 million in 27 deals, and investors poured $217 million into 39 deals in energy efficiency. The top three deals all went to lighting start-ups.

"Lighting is hot," Haji said in a statement. "A lot of entrepreneurs and venture firms are looking for lighting deals."

North American companies received 81 percent of investment globally, with Europe (including Israel) picking up 14 percent; China, 4 percent; and India, 1 percent. North American companies raised $1.5 billion in the first quarter. California-based companies topped the list, pulling in more than half of the total investment: 57 percent, or $870 million. Oregon was a distant second, with $179 million or 12 percent of the total investment.

There were 13 clean-tech IPOs during the quarter, which raised a total of $1.5 billion. China led the way with eight offerings. In February, Tesla Motors (founded by Inc.'s 2007 Entrepreneur of the Year Elon Musk) filed its IPO documents – following filings by Fremont, California-based Solyndra, a maker of skinny tube-shaped solar panels for commercial rooftops, and Codexis (No. 924 on Inc.'s 2009 Inc. 5000), a Redwood City, California company that crafts designer enzymes for biofuel production.

no time again...