Solar continues to lead US cleantech investment: analysis

Energy/electricity generation companies attracted the maximum investment of any cleantech segment during the third quarter. The investment figure for such companies was around $1 billion, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource.

The analysis shared that the solar companies bagged by far the largest component of this segment with $990 million invested in 14 rounds, a quarter-on-quarter increase of 66 percent in capital, with no change in the number of rounds. Large follow-on rounds characterised solar financings during the quarter, it added.

It also shared that venture capital investments in US cleantech companies reached a record $1.6 billion in the third quarter of 2008, up 55 percent from the previous quarter.

A total of $3.3 billion was invested in the first three quarters of 2008, surpassing the figure for the same period last year by 71 percent. Later-stage rounds, which increased 177 percent to $906 million duringĀ  the quarter, were a major driver of the investment growth.

It was highlighted that considering the 10 largest financings in the third quarter, it looks as if cleantech companies are pairing venture financing with other funding sources to support their capital-intensive commercialisation initiatives. Six of the 10 top deals incorporated private equity firms, hedge funds and sovereign wealth funds as first time investors in the entity. Two deals included initial investments by a strategic corporate investor.

Joseph Muscat, Americas director of Cleantech and Venture Capital, Ernst & Young LLP said, "Factors such as technological advances, consumer demand and programmes at both the federal and state-level help to create the conditions needed for long-term growth in cleantech."