Clean Tech VC Investment Falls Off A Cliff In Q1

Clean tech investment plummeted to $1 billion for the first quarter of 2009 — a 41% drop from the fourth quarter of 2008 and a 48% fall from the same time last year.

This the second straight quarter of decreased investment and the lowest capital flow in the past two years, according to the Cleantech Group, which announced the results today.

The average size of a venture round was $12.3 million in the first quarter. North America led the way with 68% of total investment, while Europe and Israel accounted for 28%, China for 2%, and India for 1%.

Kleiner Perkins was the most active of all firms being involved in four rounds. It invested in Alta Devices, Fisker Automotive, Silver Spring Networks, Think Global. After that, CMEA Ventures, Quercus Trust, and 21Ventures all had three rounds.

Here’s breakdown of where all the money went:

*SOLAR – $346 million
Deals included Norsun, a Norwegian polysilicon producer, which raised a $72 million round led by Good Energies. Concentrated PV startup SolFocus raised $67 million from Apex Venture Partners, NEA and NGEN. Service provider Solar Power Partners raised $47 million, and thin-film startup Sierra Solar Power raised $40 million.

*BIOFUELS – $96 million
Deals included BioMCN, which has developed a process to convert crude glycerine, a byproduct of biodiesel, into methanol. It raised $46 million from Waterland Private Equity. Cellulosic ethanol company ZeaChem raised a $34 million round led by Globespan Partners and Prairie Gold Venture Partners.

*ADVANCED BATTERIES – $94 million
Deals included lithium-ion startup Boston Power, which raised a $55 million round led by Swedish investor Foundation Asset Management. Boston Power’s Sonata batteries were chosen by HP for nearly 70% of its consumer line of notebooks. UK-based Nexeon raised over $14 million from Invesco Perpetual and others for its silicon anode technology for lithium-ion batteries, while Swiss startup ReVolt Technology raised over $13 million for its Zinc-air battery technology for consumer electronics devices.

*ELECTRIC VEHICLES – $78 million
Deals included Dutch transmission manufacturer Fallbrook Technologies, which raised $25 million from NGEN Partners and Robeco. Scuderi Group raised $20 million for its split cycle internal combustion engine, PHEV manufacturer Bright Automotive raised $11 million from White Pines Partners and Duke Energy, and Smith Electric Vehicles, which manufactures electric trucks and vans, raised $10 million.

Full Release:

SAN FRANCISCO, April 1, 2009 – The Cleantech GroupT, founders of the cleantech sector and providers of leading global market research and financial services for the cleantech ecosystem, along with Deloitte, which together with its affiliates provides audit, tax, consulting and financial advisory services to cleantech companies, today released preliminary 1Q09 results for clean technology venture investments in North America, Europe, China and India, totaling $1.0 billion across 82 companies.

The 1Q09 total is down 41 per cent from the previous quarter, and down 48 per cent from the same period a year ago. Cleantech venture investments have now declined for two consecutive quarters since peaking at $2.6 billion in 3Q08, representing the lowest level of venture capital investment in clean technology companies in two years. The average round size has contracted from $20 million in 3Q08 to $ 12.3 million in 1Q09.

“Cleantech financing is moving into a new phase, characterised by diversified funding sources, as the global recession and liquidity issues impact venture investors. Venture funds continue to invest significant sums, albeit at a slower pace and smaller scale than in the past two years,” said Brian Fan, Senior Director of Research, Cleantech Group.

Meanwhile, governments globally are allocating historic amounts of capital to clean technologies through stimulus packages, loan guarantees and tax incentives, which will enable the cleantech industry to continue to develop. A report titled ‘Towards a Global Green Recovery’ to be presented at the G20 Summit in London later this week estimates that almost $400 billion of some USD $2.6 trillion in economic stimulus allocations announced so far by G20 nations are earmarked for clean technologies such as renewable energy, improved electrical grids and cleaner cars.

Additionally, utilities and corporations are increasingly playing a leadership role in developing the sector. “Governments are not the only significant new investors in cleantech.Utilities are also stepping up to fill the funding void and making equity investments in companies,” said Scott Smith, Leader of CleanTech for Deloitte. “Investment plans range from building and operating solar and wind systems to financing third party, shovel-ready projects. These moves underscore cleantech’s emergence as a significant and maturing market that will remain highly relevant-both during and following the economic downturn.”

BY TECHNOLOGY SECTOR
The leading investment areas from the quarter were solar, biofuels, advanced batteries and electric vehicles.

* SOLAR – $346 million
Deals included Norsun, a Norwegian polysilicon producer, which raised a $72 million round led by Good Energies. Concentrated PV startup SolFocus raised $67 million from Apex Venture Partners, NEA and NGEN. Solar service provider Solar Power Partners raised $47 million, and thin-film startup Sierra Solar Power raised $40 million.

* BIOFUELS – $96 million
Deals included BioMCN, which has developed a process to convert crude glycerine, a byproduct of biodiesel, into methanol. It raised $46 million from Waterland Private Equity. Cellulosic ethanol company ZeaChem raised a $34 million round led by Globespan Partners and Prairie Gold Venture Partners.

* ADVANCED BATTERIES – $94 million
Deals included lithium-ion startup Boston Power, which raised a $55 million round led by Swedish investor Foundation Asset Management. Boston Power’s Sonata batteries were chosen by HP for nearly 70% of its consumer line of notebooks. UK-based Nexeon raised over $14 million from Invesco Perpetual and others for its silicon anode technology for lithium-ion batteries, while Swiss startup ReVolt Technology raised over $13 million for its Zinc-air battery technology for consumer electronics devices.

* ELECTRIC VEHICLES – $78 million
Deals included Dutch transmission manufacturer Fallbrook Technologies, which raised $25 million from NGEN Partners and Robeco. Scuderi Group raised $20 million for its split cycle internal combustion engine, PHEV manufacturer Bright Automotive raised $11 million from White Pines Partners and Duke Energy, and Smith Electric Vehicles, which manufactures electric trucks and vans, raised $10 million.

M&As and IPOs
Clean technology M&A totaled an estimated 111 transactions in 1Q09, of which totals were disclosed for 25 transactions totaling $3.0 billion. This is down 42% from 4Q08, which saw 134 M&A transactions, of which 45 were disclosed for a total of $4.8 billion.

Cleantech Group noted four cleantech IPOs in 1Q09, three in China and one in Switzerland. The largest deal was China Singyes Solar Technologies Holdings Ltd, a solar service provider, which raised $8.1 million on the Hong Kong Futures Exchange.

BY GEOGRAPHY
North America accounted for 68% of the total, while Europe and Israel accounted for 28%, China for 2%, and India for 1%.

* EUROPE: European and Israeli companies raised USD $281 million in 31 disclosed rounds, down 11% from 4Q08 and down 31% from 1Q08. Despite the overall reduction in amount invested, Europe and Israel increased its proportion of overall global investment to 28%, up from 19% in 4Q08 and 21% in 1Q08.

The largest deal was a USD $71.6 million round for Norwegian solar company Norsun, one of the top 10 largest deals ever in Europe and Israel, and pulled Norway ($79.2 million in 4 deals) into first position in the country rankings in Europe. The UK was second ($52.9 million, 11 deals) and the Netherlands third (where BioMCN’s $46 million round was the only investment of disclosed value).

* CHINA: In 1Q09, two Chinese companies, solar equipment company Jiangyin Aikang Solar Equipment Co., and Shanghai Insuring Polymer Materials Co., Ltd. raised USD $21.5 million.

There were seven M&A deals in China totaling USD $517.5 million; three of these transactions were joint ventures between Chinese companies and multinationals. Cleantech Group noted three cleantech IPOs in China in 1Q09: China Singyes Solar Technologies Holdings Ltd on the Hong Kong stock market, heat exchange manufacturer SmartHeat on NASDAQ, and sustainable fertiliser manufacturer China Green Agriculture Inc. on AMEX.

* INDIA: In 1Q09, a total of USD $54 million was invested across 3 deals, out of which one company did not disclose the amount. Jain Irrigation, India’s largest provider of micro-irrigation systems; Sri Biotech, an agri-biotech company and Polygenta all received funding in the quarter. Active investors include IFC, Rabo Equity and Aloe Private Equity. ACME Group, an India-based telecom power solutions company also made an overseas investment of $30 million in California-based eSolar and PAE acquired a strategic stake in Shurjo Energy, a solar panel manufacturer, for $10 million.
Despite the low investment amount and number of deals recorded in the region, the renewable energy sector in India continues to be very active.  Major Indian companies, such as Tata Power, BHEL and Greenko Group, announced initiatives to ramp up investment in clean energy projects across the country. Several Indian state governments in India also announced policies this quarter to increase the use of solar power and biomass for energy generation.

TOP INVESTORS:
1Q09 Most Active Cleantech Venture Funds
Venture Capital Firm        # of rounds                Companies

Kleiner Perkins Caufield & Byers
4
Alta Devices, Fisker Automotive, Silver Spring Networks, Think Global

21Ventures
3
Advanced Hydro, Graphene Energy, Variable Wind Solutions

CMEA Ventures
3
CFX Battery Inc., Draths Corp, SuperProtonic

Quercus Trust
3
Advanced Hydro, Graphene Energy, Sencera International

Source: Cleantech Group (cleantech.com)

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