By Renee McGaw
Denver Business Journal
Read the full article at bizjournals.com
U.S. venture capital investment in cleantech companies rose 73 percent to $572 million in the second quarter compared with the previous quarter, led by solar and energy efficiency deals, according to an Ernst & Young LLP analysis of data from Dow Jones Venture Source.
Two Colorado companies — Tendril Networks Inc. and Gevo — ranked among the quarter’s top five deals. Boulder-based Tendril, a residential smart grid company, got $30 million in May. Gevo, an Englewood-based biofuels company, got $40 million in April.
“The quarterly uptick reflects investor confidence in the ability of cleantech companies to capitalize on market opportunities,” Joseph Muscat, Americas director of cleantech for Ernst & Young LLP, said in a statement. “While enacted and anticipated government actions have helped bolster confidence and catalyze new capital, we believe that leading cleantech companies will be defined by their ability to execute on business plans and advance their technologies through commercialization and distribution despite the challenging economy.”
Compared with the second quarter of 2008 — the second-highest quarter for cleantech investment on record — U.S. capital investment was down by 59 percent and the number of transactions, at 49, was down 16 percent.
Ellora Energy Inc. of Boulder is one of only 28 companies currently registered for an initial public stock offering, or IPO.
Overall, E&Y analysts reported seeing a lot of IPO movement, according to the report. Given the current market conditions, even more might have been expected, they said. But it takes time to resume activities after they’ve been put on hold, as they have for many companies because of questions about the economy.
During the second quarter, cleantech investment was led by the energy/electricity generation category, which raised $157 million, up 181 percent from the first quarter. Solar deals received most of the capital, more than tripling to $148 million. Deal activity in the solar segment represented 26 percent of all quarterly cleantech investment by VC firms, and was driven by deals such as a $25 million first-round investment in Skyline Solar of Mountain View, Calif.
The energy efficiency category grew by 168 percent from the first quarter, to $152 million. The Tendril investment was a notable deal in this sector.
Meanwhile, investment in the alternative fuels category rose to $53 million, thanks largely to the $40 million later stage round investment in Gevo.
The transportation sector received $65 million in investment during the quarter, most of it from Daimler AG’s $50 million investment in Tesla Motors in San Carlos, Calif.
The second quarter data also showed a shift from companies in the product development stage toward companies in the start-up and shipping product stages. Start-up cleantech companies received 8 percent of financing rounds, up from zero in the first quarter. Companies at the shipping product stage accounted for 65 percent of financing, up from 54 percent in the prior quarter.
By contrast, product development stage companies received just 27 percent of financing rounds, compared with 46 percent in the previous quarter.
The results also illustrated the diversity of investors partnering in cleantech market. Seven of the top 10 cleantech venture deals included participation by private equity, hedge fund or corporate investors.
For example, a $54 million investment in Powerspan Corp., a carbon dioxide capture technology company in Portsmouth, N.H., involved a syndicate of investors that included VC firms, private equity firms, corporate investors and a hedge fund.
Government support continues to influence the growth of the U.S. cleantech market. For example, the U.S. Department of Energy released more than $47 million in federal stimulus funds to accelerate the completion of eight smart grid demonstration projects in seven states.