When it comes to government investing in cleantech, the feds aren't the only game in town. 

In November of 2008, Connecticut established a $9 million Clean Tech Fund.  Geared to spark innovation in the Nutmeg State, the fund has invested just more than $2 million to date.

"We are looking for entrepreneurs at any stage and venture capitalists looking to partner with companies headquartered in Connecticut," said Patrick O'Neill, Investment Associate at Connecticut Innovations, at GoingGreen East recently. "We look for early-stage companies in cleantech -- broadly defined as any technology that conserves resources, reduces waste, or protects the environment."

The fund's definition of cleantech includes not only renewable energy generation, energy efficiency, environmental remediation, and clean water technologies, but also nuclear innovations.  An evergreen fund that reinvests its proceeds, the Connecticut Clean Tech Fund is focused on long-term returns rather than 10-year gains.  Its maximum investment is $1 million, though follow-on investments are available through the Eli Whitney Fund, Connecticut's flagship program for early-stage technology investing.

"Our purpose is to operate continuously. We live on our proceeds and re-invest what comes back in, which makes us much more patient," said O'Neill.  "[But] we try to be fast, reactive, and responsive."

To date, the Connecticut Clean Tech Fund has invested in three companies, Optiwind, Oil Purification Systems, and Sustainable Real Estate Solutions. 

Often, these regional funds sponsored by governments don't work. Entrepreneurs don't emerge because of a particular climate, after all, and the state sometimes has different interests than regular private sector investors. In Israel, VCs often carp about the incubator programs at universities or those sponsored by the government (and the incubators reply by showing off a list of their companies that have gone on to commercial glory). Still, the popularity is growing and how these funds operate is improving. Ontario and Ireland have plunged into the market, so who knows.

Optiwind is developing a compact wind accelerated turbine for schools, office buildings, shopping centers, and hotels in the mid-sized distributed generation market.  Optiwind's turbine stands only about 200 feet tall and uses a series of small-bladed fans instead of a single large blade.  According to the company, Optiwind's turbine funnels available wind into its smaller blades, accelerating the wind and increasing efficiency.

"We are currently building an alpha demonstration unit," said O'Neill, an observer on Optiwind's board of directors.  "We are expecting mid- to late-Q2 of this year to be up and running."

As its name suggests, Oil Purification Systems sells a technology that continuously removes both solid and liquid impurities from the lubricating oil of an operating engine, drastically extending the number of miles that can be driven before an oil change is necessary.  The firm's system uses filtration and a patented evaporation process to remove contaminants.  Existing applications include heavy trucking.

"The third company is just getting out of the gate," said O'Neill.  Last month, Connecticut Innovations and LaunchCapital announced their investment in Sustainable Real Estate Solutions. The startup provides web-based energy and sustainability performance, assessment, and management software to owners of commercial real estate.

Yoni Cohen is a JD-MBA student at the Yale Law School and the Wharton School of the University of Pennsylvania.  He previously worked as a reporter for Fox Sports, among other jobs.