Summary:

Venture capital investing in cleantech companies was up slightly in the third quarter of 2011, but still continues to focus on large follow-on rounds as investors’ more capital-intensive companies are maturing and need more capital to scale up, and in some cases, reach a commercial stage.

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Venture capital investing in cleantech companies was up slightly in the third quarter of 2011, but still continues to focus on large follow-on rounds as investors’ more capital-intensive companies are maturing and need more capital to scale up and in some cases reach a commercial stage. According to the Cleantech Group, venture capital firms in the third quarter of this year invested $2.23 billion into 189 cleantech deals, which was 12 percent higher than in the second quarter of 2011 (at $1.98 billion) and 23 percent higher than the third quarter in 2010 (at $1.81 billion).

Looking just at those numbers, you could make the argument that venture capital cleantech investing is recovering. But take a deeper look at the companies that got funded and you can see a lot of the money went to maturing cleantech companies that are needing more investment to scale up; in some cases, start selling their products; and ultimately, survive. The Cleantech Group said 59 percent of the total amount of deals were for Series B or later-stage rounds, and in terms of the dollar amount invested, Series B or later-stage rounds represented 81 percent.

Nine-year-old, fuel cell maker Bloom Energy raised one of the largest rounds of the quarter at $150 million from NEA, Kleiner Perkins, and others. Bloom Energy has a line of customers buying its fuel cells, but I’ve heard it has a high burn rate.

Ten-year-old, thin-film solar maker HelioVolt raised one of the largest solar rounds, with $85 million from SK Group and NEA. (Interestingly enough, NEA didn’t previous announce its participation in the HelioVolt follow-on.) HelioVolt has yet to commercialize its solar panels. Electric car maker Coda Automotive raised the largest transportation round, according to the report, with $66 million from Aeris Capital, Angeleno Group and others, and plans to launch its first car later this year.

The same situation occurred in the first quarter of 2011, producing an almost record amount of cleantech VC funding, but again, the bulk of those fundings were follow-on rounds for capital-intensive companies like Miasole, BrightSource, Fisker Automotive, and (again) Bloom Energy. To note, electric car company Fisker also is in the process of raising another round of $150 million (but isn’t mentioned in The Cleantech Group’s report), and Kleiner Perkins is in both Fisker and Bloom rounds.

The report also notes that IPOs and M&As were down across the board compared to the first half of the year; however, China was by far the country with the largest cleantech IPOs, with 11 of the 14 IPOs. By sector, energy storage represented the largest amount of investment with $514 million, followed by solar with $223 million. By amount of deals, energy efficiency was the most popular with 34 deals.

Image courtesy of AMagill.

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