Cleantech Venture Investment Down 33%; But IPOs Remain Strong in Q2

Cleantech venture investment fell in the second quarter of 2011 (Q211), but IPO and M&A activity remained strong.

Clean technology venture investments in North America, Europe, China and India totaled $1.83 billion across 161 deals, according to preliminary results released by the Cleantech Group.

Measured by dollars invested, investments fell 33% compared to the first quarter ($2.75 billion) and were also 10% lower than Q2 2010 ($2.03 billion).

The number of deals dropped from 174 to 161 in Q1. 106 of those deals (66%) were Series B or later rounds, and accounted for 87% ($1.59 billion) of all money invested during the quarter.

Energy efficiency continued to be the top investment sector.

"Our global VC numbers point to continued strength in energy efficiency, which tops the charts in both amount invested and deal count," says Sheeraz Haji, CEO of Cleantech Group. "The IPO window remains open, and the pipeline of companies preparing public offerings continues to build. In this climate, investors are favoring later-stage investments."

Both the IPO and M&A market remained robust in Q211 – China was the most active country and biofuels the most active sector. Six of the 11 IPOs in Q211 came out of China, with the $800 million IPO for Huaneng Renewable Energy leading the pack.

The IPOs of Solazyme and KiOR provide continued proof of institutional investors’ appetites for biofuels and biomaterials.

M&A activity was also notable this quarter with two major acquisitions. French energy giant Total acquired a 60% stake in solar leader SunPower for $1.37 billion and Toshiba acquired meter company Landis+Gyr for $2.3 billion

Venture Investment by Technology Sector

Energy efficiency was the leading sector by amount invested ($428 million), followed by solar ($363 million) and biofuels ($237 million).

Energy efficiency was also the most popular sector measured by number of deals, with 38 funding rounds, ahead of solar (27 deals) and materials (13 deals). The largest transactions in the top four sectors were:

ENERGY EFFICIENCY – $428 million in 38 deals

Bridgelux, a California-based developer of energy efficient LED lighting systems, raised $80 million from Chrysalix Energy Venture Capital, VantagePoint Capital Partners, VentureTech Alliance and others

iControl Networks, a California-based provider of smart-home software allowing for security and energy management, raised $50 million from Charles River Ventures, Cisco Systems, Comcast Ventures, Intel Capital, Kleiner Perkins Caufield & Byers (KPCB) and others.

Hara, a California-based provider of cloud-based enterprise energy and resource management software, raised $25 million from Nth Power, Navitas Capital, Kleiner Perkins Caufield & Byers (KPCB) and others.

SOLAR – $363 million in 27 deals

Suniva, a Georgia-based developer of high efficiency monocrystalline silicon photovoltaic cells, raised $94.4 million from Warburg Pincus and New Enterprise Associates.

Enecsys, a UK-based developer of micro-inverters for solar PV systems, raised $41.3 million from Wellington Partners Venture Capital, Good Energies, Climate Change Capital and BankInvest New Energy Solutions (NES Partners).

Royal Tech Solar, a China-based manufacturer of concentration and tracking devices for solar PV and thermal power systems, raised $35.7 million from Tripod Capital.

BIOFUELS & BIOMATERIALS – $237 million in 12 deals

Enerkem, a Quebec-based producer of second generation biofuels and chemicals, raised $60 million from Waste Management, Valero Energy, and others.

KiOR, a Texas-based next-generation renewable biofuels company, raised $55 million from Khosla Ventures and other investors ahead of their IPO.

BioAmber, a Minnesota-based producer of bio-based succinic acid, raised $45 million from Sofinnova Partners, Naxos Capital Partners, Mitsui & Co. Global Investment and Cliffton Group.

TRANSPORTATION – $176 million in 9 deals

Fisker Automotive, a California-based manufacturer of luxury electric vehicles, raised $100 million from undisclosed investors.

Proterra, a Colorado-based electric bus manufacturer, raised $30 million from Vision Ridge Partners, Mitsui & Co. Global Investment, Kleiner Perkins Caufield & Byers (KPCB), GM Ventures and 88 Green Ventures.

Streetline, a California-based provider of smart parking, raised $15 million from Sutter Hill Ventures, RockPort Capital Partners and Fontinalis Partners.

VENTURE INVESTMENT BY WORLD REGION

North America accounted for 77% of the total, while Europe & Israel accounted for 17% and Asia & Pacific for 6%.

In North America, California led the way with $611 million investment (43% share), followed by Massachusetts ($191 million, 13%) and Texas (108 million, 8%).

GLOBAL M&As AND IPOs

There were 11 clean technology IPOs during the quarter, totaling $1.99 billion, nearly equaling the $2.1 billion from 1Q11.

The largest IPO was for Huaneng Renewable Energy, a subsidiary of China’s state-owned Huaneng Group, which raised $800 million on the Hong Kong Stock Exchange. Also notable was an IPO for California’s Solazyme, a venture-backed developer of algae-based renewable oils and green bioproducts, which raised $227 million on NASDAQ.

Clean technology M&A totaled 86 transactions in 2Q11, of which totals were disclosed for 31 transactions totaling $13.0 billion.

Transactions were down compared to 1Q11, which saw 140 transactions (35 of disclosed value) totaling $15.2 billion. The largest deal was Toshiba‘s $2.3 billion acquisition of Switzerland’s Landis+Gyr, a leading developer of advanced electricity metering solutions.

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