The first quarter of 2012 was a mixed bag for solar companies seeking venture capital (VC) investments, reflecting a more cautious approach to the industry on the part of investors.
The US still leads as the dominant country for solar VC investments, accounting for about 80% of the funding.
The good news is that VCs are still active in solar. They funded 34 deals, the most ever recorded in the industry. But those deals got much smaller investment dollars - a total of $329 million - the lowest amount recorded since the fourth quarter of 2010, according to market research firm Mercom Capital Group.
The average investment amount was just $10 million, almost half that in 2011, which many considered to be a tough year.
VCs remain interested but they're afraid of the risk so they are limiting their total investments.
Their fear comes from the confluence of factors that are putting a drag on the industry: over-supply because of the Chinese solar capacity glut; subsidy cuts in Germany and Italy, the world's largest markets; and the expiration of the tax grant program in the US.
Mercom expects this cautious approach to continue through 2012.
5 companies raised about 60% of the total funding in this quarter, led by SolarCity with $81 million, followed by CIGS companies MiaSolé, Nanosolar and AQT Solar, which raised a combined $94 million.
CIGS companies received the majority of VC funding as they did in 2011, when they raised about $500 million.
The earliest stage companies received the fewest investments and Series B rounds attracted the most deals.
56 VCs participated in the 34 deals. VC firms that participated in multiple rounds include Black Coral Capital and Firelake Capital Management.
There were 15 merger and acquisition (M&A) transactions totalling $5 billion, mainly due to the $4.7 billion acquisition of Solutia.
Eastman Chemicals bought Solutia, which makes encapsulants and performance films for solar PV and concentrating solar (CSP) and heat transfer fluids for CSP plants.
The other big M&A transaction was Tokyo Electron's $275 million acquisition of Oerlikon Solar, which makes solar equipment and turnkey manufacturing lines.
11 new cleantech and solar-focused investment funds committed $5.7 billion to the space.
There was one IPO: microinverter company Enphase Energy, which raised $62 million.