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February 06, 2012
US Venture Capital Investment in Cleantech Down in 2011
    by Robert Kropp

Ernst & Young reports that investment by US-based venture capital in cleantech companies amounted to $4.9 billion in 2011, a 4.5% decrease from 2010.

Bloomberg New Energy Finance reported last month that global investment in clean energy reached a record $260 billion in 2011, and that for the first time since 2008 US clean energy investment outpaced that of China.

Turbulence in capital markets in the US was not as kind to venture capital (VC) investment in cleantech, however, as Ernst & Young reported that VC investment in the space decreased by 4.5% from 2010 to $4.9 billion.

To put the lagging numbers in perspective, the impending initial public offering (IPO) of Facebook is expected to raise $5 billion, more than all VC investment in cleantech in 2011.

Despite the decrease, 2011 VC investment in cleantech was up 29% over the 2009 figures. And Jay Spencer, Cleantech Director for Ernst & Young, expressed optimism for the future.

"We've reached a point where new products and services are ready to be launched, and as these products come to market, we're seeing renewed interest, innovation and opportunity in cleantech," he said.

However, Michael Liebreich, chief executive of Bloomberg New Energy Finance, added a caveat to the positive figures recorded by overall clean energy investment in the US last year.

He warned, "The US figure was achieved thanks in large part to support initiatives such as the federal loan guarantee program and a Treasury grant program which have now expired. The country's principal remaining support measure for renewable energy, the Production Tax Credit, is currently also scheduled to fall away at the end of 2012 unless it is extended."

Ernst & Young's analysis found that cleantech companies in the revenue generation stage accounted for almost 70% of VC investment, up from 50% in 2010. Although investment in the energy/electricity segment decreased by 5% in 2010, it still accounted for the greatest share of VC investment, with $1.5 billion raised.

Investment in companies in the energy efficiency segment decreased by 29% in 2011, to $647 million.

VC investment in the energy storage segment, on the other hand, increased by 253%, with $933 million invested last year.

IPOs by cleantech companies increased slightly, from three in 2010 to five last year. A total of $688.3 million was raised through cleantech IPOs in 2011.

Seventy-nine mergers and acquisitions last year accounted for $2.8 billion in VC investment.

Regionally, $2.8 billion in VC investment occurred in California. Massachusetts accounted for $465 million, and Colorado had investments of $363 million.


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