Cleantech Venture Investment in '08 Breaks Record, Despite Weak Finish

Despite a significant drop cleantech startups investments in the fourth quarter, 2008 still delivered a record level of investment for the cleantech industry, according to two reports out recently. According to the Cleantech Group’s preliminary results for the fourth quarter of 2008, $1.7 billion was put into 99 investments, the smallest quarterly total in the last 6 quarters. But in 2008 overall, $8.4 billion of venture investment went into cleantech companies, up 38 percent from the annual amount in 2007.

Analysts at Greentech Media delivered similar numbers. They found that the fourth quarter of 2008 saw more than $2.5 billion of venture investment put into cleantech firms, a drop from the previous quarter of $2.9 billion. But for the year overall, Greentech Media found that 2008 delivered “a record fundraising” year, with $7.7 billion in investment for cleantech firms.

Historical Clean Technology VC Investment By Year — North America, Europe, Israel, China, and India
2001 $506,780,774
2002 $883,269,409
2003 $1,258,565,762
2004 $1,398,256,823
2005 $2,077,524,074
2006 $4,520,208,949
2007 $6,087,179,844
2008 $8,414,259,610

Source: Cleantech Group

Looking over the numbers, there are some telling trends from 2008: Both groups found that solar was by far the dominating area of cleantech investment for much of 2008, and in particular thin-film solar firms, which took the three largest rounds. The Cleantech Group says solar took a 40 percent share, or $3.3 billion, of clean technology venture investment dollars. And in 2008 the three largest investments were for NanoSolar ($300 million round), Solyndra ($219 million round) and SoloPower ($200 million round). All those companies make CIGS-based thin film solar — that’s an investment bubble if I ever saw one.

The second hottest cleantech sector for 2008 investment was biofuels, which received 11 percent of total funding, or $904 million, according to the Cleantech Group. Greentech Media says there were 18 biofuel deals in the fourth quarter, which combined delivered $358.55 million to biofuel startups. Our guess is that those biofuel numbers will be way down in 2009, given the difficult time companies are having raising large amounts of capital to build and expand biofuel plants, as well as the turning public and political good will for biofuels in general.

Following solar and biofuels, the Cleantech Group says transportation had the third most investment in 2008 with 9.5 percent of the total and $795 million; wind followed that with 6 percent of the total, or $502 million; smart grid delivered 4.1 percent or $345 million. We’re thinking, with federal policy support, both the smart grid and transportation investments will jump in 2009.

Wondering about the ever-present but hard-to-predict Chinese cleantech industry? Investments in China actually grew by a healthy 22 percent over 2007 levels, and accounted for 5 percent of the global total in 2008, according to the Cleantech Group. India accounted for 3 percent of the global total, which was actually down 20 percent from 2007. Europe and Israel accounted for 21 percent of the global total.

And per usual, our favorite list: The Top 5 venture investors for 2008:

2008 Top Five Most Active Clean Technology Venture Funds
21 Khosla Ventures
18 Kleiner Perkins Caufield & Byers
16 Quercus Trust
13 RockPort Capital Partners
13 Draper Fisher Jurvetson

Source: Cleantech Group (