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Call my stock broker! The economy may be in a slump, but deep-pocketed investors are still optimistic about the future of cleantech companies. US venture capital (VC) investment in cleantech companies in the third quarter of 2009 increased 46% compared to the prior quarter.
The total amount invested was $965 million, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource. This is the second consecutive quarter of growth in 2009 and the fifth-largest quarterly investment total on record. Compared to the first quarter of 2009, quarterly capital investment has increased a whopping 182%.
The majority of investment dollars - 61% - was directed to companies that are currently shipping products, as opposed to companies that are in the research and development phase. The energy/electricity generation category received the largest amount of investment with $316 million or 33% of the total cleantech investing. Solar technologies garnered the majority of investment in this category, raising $309 million, a quarterly increase of 115%. The alternative fuels category, consisting entirely of biofuels deals, grew by 58% to $71 million.
"Continuing growth in cleantech investment in the third quarter reflects investor confidence in the commercialization of clean technologies," says Joseph A. Muscat, Ernst & Young LLP, Americas Director of Cleantech. "The diversity in this quarter's investment activity, in terms of the technologies receiving investment and the participating investors, illustrate the potential to create value through the development of a low-carbon economy."
Some of this growth is spurred by the disbursement and spending of American Reinvestment and Recovery Act (ARRA) funds. As of the end of September, New Energy Finance (NEF) tracked $18.2 billion in disbursed ARRA funds to state and local agencies for energy efficiency, renewable energy, grid improvements and carbon capture and sequestration. NEF estimates that $9.5 billion in ARRA funding in these categories has already been spent. This growing pipeline of stimulus spending, which NEF expects to peak in 2010 or 2011, contributes to cleantech market confidence.
Alison Pruitt is a freelance writer/editor living near Washington DC. She has written about a variety of issues, including education, healthcare, IT, the arts, and energy/environment -- and has worked with the U.S. Department of Energy. She has a B.A. from Oberlin College and a Ph.D. in English Literature from Rutgers University.
