My last post seems to have set off some alarm bells for the various market analysts putting out cleantech venture capital tallies, since I heard from most of them today at some point...  For the record, my intent wasn't to question anyone's methodologies, much less competence! But you can understand why these professionals take these things seriously, since their job is to be as accurate as possible.  Unfortunately, there was like an 6x delta between the high and low reported totals this past quarter, so it's tough not to want to ask tough questions. To the strong credit of guys like Eric Wesoff (GTM), Brian Fan (Cleantech Group) and Adam Wade (Dow Jones), they welcomed my questions today and gave me a lot of good info that helps illustrate just how many judgment calls there are in all these tallies. Let me provide a few non-hypothetical examples from the first quarter.  Readers:  Would you include these deals in the Q1 tally if you were in charge? 1.  Optisolar raises a $30mm round of senior secured promissory notes, as reported on March 18th by PE Hub based upon regulatory filings.  These notes may or may not be intended to convert into equity in any subsequent financing event. Would you count it in a Q1 cleantech venture tally? 2.  SunEdison announces on March 4th that they have raised $20mm in "project financing" from Union Bank (note: link opens pdf). Would you count it in a Q1 cleantech venture tally? 3.  News comes out on March 6th that eSolar has raised $30mm from India's Acme Group in exchange for 5% ownership of eSolar, as part of a deal that also included regional licensing of eSolar's technology. Would you count it in a Q1 cleantech venture tally? 4.  On Feb. 10th, PE Week Wire reports that SolFocus has raised an additional $19.28mm in Series C financing.  Interviews with the investors and/or company (yes, these analysts do indeed do a fair amount of legwork to bring you these tallies) indicate that the financing occured in the last part of 2008 as part of a larger round, but no one has reported it previously. Would you count it in a Q1 cleantech venture tally? There are no wrong or right answers to any of the above.  All are good tallies, they're just different.  Just so you know:
  • Optisolar was included in the GTM tally, but not the Cleantech Group or VentureSource tally.
  • SunEdison was included in the VentureSource tally, but not the GTM or Cleantech Group tallies.
  • eSolar was included in the VentureSource and GTM tallies, but not the Cleantech Group tally.
  • SolFocus was included (@$47.5mm) in the GTM survey, as well as (@$66.8mm) in the Cleantech Group survey, but not in the VentureSource tally.
But I'd be hard-pressed to argue that any of the above judgments were demonstrably correct or incorrect. And that's just the solar category, dealing only with U.S.-based companies.  You can get a sense as to how the variances between the different surveys come up, especially once you include questions about whether a cleantech IT deal should be cleantech or IT, not to mention geographic scope issues. Today, VentureSource also released their cleantech-specific tally (the one I cited yesterday didn't draw cleantech investments across categories, so I had only mentioned their renewable energy numbers), and it helps draw the tallies yet closer.  VentureSource counted approximately $300mm in U.S. cleantech venture investments in Q1, which is still down from the $1B they counted in Q4. Meanwhile, the Cleantech Group counted about $700mm (I'm eyeballing this from a chart) in North American investments.  That's still a big difference between VentureSource and Cleantech Group totals (just to pick two for illustration purposes), but not such a wide divergence as we originally thought.  And then we go back to the potential methodological differences I mentioned in the last post. I've mentioned several times before that, due to methodological differences, the most useful exercise is NOT to compare across surveys, but to compare time series within any given survey.  So:
  • GTM's totals dropped from $1.7B in Q4 to approx. $1B in Q1.  Deal count dropped from 99 to 59.
  • Cleantech Group's totals dropped from a little over $2.5B in Q4 to a smidge over $1B in Q1.  Deal count dropped from 99 to 82.
  • VentureSource's totals dropped from $1B in Q4 to $0.3B in Q1.  Deal count dropped from 44 to 25.
  • Moneytree's totals dropped from $974mm in Q4 to $154mm in Q1, but deals dropped from 67 to 33.
Forget all the differences across the different surveys, what's clear is that there was a significant drop-off from Q4 to Q1, both in terms of deals and dollars.  Deals dropped probably by about a third to half.  Dollars dropped more, by 60% or more. That's not that different from the ~50% declines across ALL venture capital categories that VentureSource and Moneytree saw.  Especially once you account for the fact that the mega-deals completely disappeared, thus pulling down dollar totals more than deal totals. In another post we'll talk about why the pull-back happened and what it might mean.  For now, it's back to my (supposed) vacation... . . .