Q2 VC in Greentech Comes Back Strong

More Than $1.2B in 85 Deals Signals a Quiet Recovery in the Greentech Sector

Optimism prevailed amongst greentech venture capital investors in the second quarter of 2009.  Despite the eulogies delivered for the greentech sector because of a less than stellar first quarter, VC investment in greentech rebounded in the second quarter with more than $1.2 billion invested in 85 startups.  

Notable investment trends in the second quarter included:

• An increase in smart grid, automotive, and energy storage investments
• No giant $100 million+ solar or biofuel rounds as in 2008
• Early stage and late stage investments dominated, while mid-stage funding was harder to come by
• Slightly smaller average round sizes

Ira Ehrenpreis, General Parters at Cleantech VC, Technology Partners, commented on the numbers: “The recent quarter’s balanced distribution of sectors that attracted capital underscores cleantech’s breadth and diversity of opportunity, one of the key drivers behind why cleantech remains an enduring area.”
 
John Rockwell, founder and Managing Director of Element Partners added, "The growing belief that credit markets and the economy are on the road to recovery has investors back in the market.  Greentech markets are massive and diverse and investors are starting to pour additional money into the next wave of greentech opportunities."

Solar power was once again the leading investment segment at more than $330 million. But unlike previous quarters – the second quarter saw a much more balanced distribution across the various sectors with a marked increase in automotive (more than $202 million) and energy storage (more than $180 million).

One of the drivers for steady second quarter venture investment was the promise of stimulus monies offering start-up investors a non-dilutive funding source. To fully return to health, the cleantech sector needs a rebound in project financing levels, level-headed carbon legislation (good luck to us on that) and some hope in the IPO market.

Details on every greentech deal from this quarter are in this report.