By Yuliya Chernova
The Wall Street Journal
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Venture capital isn’t flowing into U.S. clean-technology companies like it once was, new investment figures show. The sector is suffering from overall uncertainty in the venture market, coupled with fears about investing in businesses that require a lot of capital, insiders say.
“The general trend has been down, but there are a few notable exceptions,” says Paul Holland, a general partner with Foundation Capital, which has backed several companies in the energy-efficiency and smart-grid sectors.
Clean-tech companies, which include everything from wind and solar to biofuel and clean-coal ventures, raised $575.6 million in 53 deals in the third quarter, less than half of the amount they raised in the year-earlier quarter, according to Ernst & Young LLP, based on data from Dow Jones VentureSource, which is owned by News Corp., publisher of The Wall Street Journal. Still, because of a fairly robust first half, the sector may close the year little changed from 2009 in terms of money raised.
Start-ups offering products or services designed to increase energy efficiency attracted the most activity in the third quarter, raising $161.6 million in 17 deals. These companies typically have relatively modest capital needs.
More capital-intensive solar-power businesses, meanwhile, have become less popular with the venture-capital crowd. They have accounted for about a quarter of the total amount invested in clean-tech ventures so far this year, down from about half during 2008.