According to a new study released earlier this month fromPricewaterhouseCoopers LLP, venture capitalists poured $2.2 billion into Cleantech companies in 2007. The report documents Cleantech’s “coming of age” through the analysis of key political and corporate trends occurring in this space, VC funding across all green sub-sectors and the adoption rates of specific cleantech technologies. Record-setting oil prices and the emergence of climate change as a major public policy issue have helped drive investors into technologies aimed at producing alternative and renewable energy, which is an economically viable alternative to fossil fuels. The report also includes insights from industry experts on the exit climate for venture-backed cleantech companies through 2009.
The report, entitled “Cleantech Comes of Age,” discusses the trends in clean technology from the impact of oil prices to the M&A market and includes data from the MoneyTree Report, a quarterly survey that tracks cash-for-equity investments by the professional venture capital community in private emerging companies in the United States. The increased venture capital investment into the Cleantech sector can be directly associated with the growing concerns about the environment, energy costs and security. Despite signs of a weakening economy, the high investment level and intensified adoption rate of technologies in this sector validates the expected growth predicted by industry experts.
“There is huge enthusiasm taking place in the Cleantech industry and as consumers and corporations increasingly seek new ways to become environmentally responsible, interest and funding directed towards the sector will only continue,” said Tim Carey, U.S. cleantech leader at PricewaterhouseCoopers. “We anticipate investments in this sector to become even further segmented with specific sub-sectors emerging in solar, wind, power storage biofuels and transportation.”
Key findings from the report include:
* Cleantech sector is being driven by healthy venture capital investment, continued momentum in cleantech adoption in the United
States, and high fossil fuel prices
— Venture capitalists poured $2.2 billion into U.S. cleantech companies in 2007 — a 45% jump from 2006
— Solar installations increased 125%
— Installation in wind turbines grew 45%
— Bio-ethanol installation production lifted 32%
* While the Cleantech sector as a whole is coming of age, specific sub-sectors are experiencing stronger growth than others.
— VC funding in solar energy jumped 133% to nearly $600 million in 39 deals in 2007
— Investment in wind energy generation companies grew to $115 million in nine deals in 2007, up from $10 million and three
deals in 2006
— Investment in alternative fuels, including biofuels and nuclear energy, totaled $290 million in 2007, which fell from being the
highest-funded sub-sector in cleantech in 2006 when $462 million was invested
— The pollution and recycling sector emerged as a promising growth area, attracting 29 deals totaling $202.1 million in 2007
* Concerns over energy security and costs are heating to uncomfortable levels both at the gas pumps — and in the boardrooms.
— 40% of senior executives surveyed feel that reducing greenhouse gas emissions and/or waste and pollutants over the next five
years is a leading or important priority within their company
— 64% of CEOs are concerned about rising energy costs
— 45% of these same CEOs are concerned about the potential threat to their business growth prospects as a result of energy
security
“Just as the venture capital industry led the way in creating the biotech, semiconductor and Internet industries, venture capitalists are now poised to help establish a robust clean technology sector comprised of innovative, cutting edge companies in the United States,” said Mark Heesen, president of the National Venture Capital Association. “It is imperative that they work hand in hand with the Congress, the Administration and the regulators to enact public policies that are conducive to research and capital investment in this sector. The venture capital industry, as evidenced by growing investment levels, is committed to bringing to market state-of-the-art technologies that conserve energy and natural resources, protect the environment, and reduce harmful waste for years to come.”
