To judge from the headline of the Cleantech Group's Q2 numbers, "Global Clean Technology Venture Investment Increases 65 Percent in 1H 2010", you might think that cleantech venture capital is white hot right now.
It's certainly not as bad as it was in 1H09. But there are signs in the CG numbers that things remain fairly tepid. As the press release describes, the number of deals actually went down from Q1 to Q2 (from 192 to 140), for example.
But this is why we ignore headlines, and even dollar totals, and dig into the details, right?
So what are the trends of interest within the broader mediocre activity level in the sector. First of all, much of the decline in deal count (which, as a reminder, we care about a lot more than any dollar total which can be skewed by a big deal or two) occurred in North America, according to the CG tally. North American deals plummeted from 128 in Q1 down to 76 in Q2. Meanwhile, Europe and Israel appear to have had an uptick in dealflow from quarter to quarter.
In terms of sectors, energy efficiency is now officially mainstream for cleantech venture capital investment, being the sector with the highest number of deals tracked (31), topping even solar (26 deals), biofuels (13) and smart grid (11). Of course, the dollar totals for energy efficiency put that category at the BOTTOM of sectors tracked, but that's exactly why the sector is popular right now, because of its capital efficient attributes.
So in short, yes, when compared to the trough that was 1H09, cleantech venture capital has picked up. But it's still pretty rocky, particularly in North America.
My guess is that the dealflow drop-off reflects the fact that so many cleantech VCs are out fundraising right now. They're in check-gathering, not check-writing, mode. My gut feel is that many of the insider rounds to arm existing portfolio companies with additional cash are also done by now.
Unfortunately, for cleantech entrepreneurs this means it will continue to be lean times on the fundraising front going forward.
