Monday, July 14, 2008

Greentech, VCs and green cosmetics by POMEGA5

Greentech Taps VCs for Record Investments in 2Q

Greentech Media reports investments of $1.3 billion in the second quarter.

Venture capitalists invested a record amount of money in greentech in the second quarter, according to a report released by Greentech Media's research arm Wednesday.

Investments in North America, Europe, Israel and Australia reached $1.3 billion in 74 deals, the Venture Power Report concluded.

That represents an increase of 30 percent from the first quarter, when the Venture Power Report tracked $1 billion in 73 cleantech deals.

Solar power companies grabbed the largest portion of the funding in the second quarter, raising $670 million in more than 23 financing rounds, according to the report.

Concentrating solar-thermal companies eSolar, BrightSource Energy and Sterling Energy Systems snagged almost half of that, taking home a total of $350 million.

Biofuels represented the next-largest sector, pulling in $258 million in 12 deals, while energy-efficiency and smart-grid companies snagged $138 million in 14 deals.

At the rate investors are plunging money into greentech companies, 2008 is on track to beat last year's record-breaking total of $3.43 billion, according to Eric Wesoff, a senior analyst at Greentech Media Research.

Greentech Media will discuss the report's results in a Webinar Wednesday.

But not all the news was good.

Echoing news from the National Venture Capital Association and Thomson Reuters last week, Wesoff said there were no venture-backed IPOs during the second quarter.

He cited unfavorable market conditions, but said things were looking up.

"These things are cyclical," he said. "We are going to see several VC-backed energy IPOs in the next few quarters."

The third quarter already saw its first IPO last week, when water-desalination company Energy Recovery raised $68.7 million in its Nasdaq debut (see Green Light post and Funding Roundup: Slow IPOs, Big Ambitions).

Other candidates include battery developer A123Systems, thin-film solar startup Nanosolar and solar-equipment manufacturer GT Solar, Wesoff said.

He also picked electric-car maker Tesla Motors as an IPO candidate, saying it is one of only a few "pure play" electric-vehicle companies during an era of record-breaking gas prices, which are expected only to rise.

Tesla told the Financial Times in February it was headed for an IPO (see Green Cars Cruise Forward).

Greentech Media is one of a number of groups tracking cleantech investing.

On Tuesday, the Cleantech Group published its second-quarter figures (see VCs Dole Out $2B in 2Q). The study, which also reported a record-breaking amount of investment in the quarter, said that VCs have invested $2 billion in 96 companies.

That's $700 million more than recorded by Greentech Media. Part of the discrepancy is that the Cleantech Group includes investments from additional countries, including China and India.

Wesoff said the difference also stems from the fact that the Cleantech Group defines its role more broadly than the Venture Power Report, including investments in a larger variety of technologies.

Wesoff tracks renewable energy, rather than cleantech, but considers that category to include automobile, energy storage, energy-efficiency, smart-grid and demand-response technologies, as well as solar and alternative fuels. He excludes investments in water technologies and green materials, for example.

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