VC Investment Down, IPOs Up for Clean Technology Companies in 2011

Solar panels in the Mojave Desert. Photo by Shayan (USA). Some rights reserved.

The public debate about government’s role in developing clean energy has never been livelier. In addition to President Obama’s push for clean energy in his State of the Union address, Spain, a poster-child for wind energy, is making headlines for cutting subsidies to renewable energy industries. Less discussed, at least recently, is the role of private investment in clean energy.

An Ernst & Young analysis, covered by Environmental Finance here, shows that venture capital investments in clean technology reached $4.9 billion in 2011, down 4.5% from 2010 due to a slow fourth quarter. The number of deals fell slightly to 297 from 300 in 2010, but Ernst & Young’s clean-tech director, Spencer Jay, trumpets that the industry is holding steady in a tough economic environment, and that many companies are commercializing their services.

The leading clean-tech segment was energy and electricity generation, raising $1.5 billion, followed by the industry products and services segment at $1.0 billion, energy storage at $932.6 million, and energy efficiency – the innovation that Ernst & Young says does not require as much capital – at $646.9 million.

The big mover here is the energy storage sector, which saw a 250% increase in investment in 2011 compared to 2010. Energy storage complements the intermittent electricity generation of wind and solar, allowing the overall cost of electricity to consumers to decline.

The IPOs announced in 2011 for clean-tech companies confirm these trends. Solazyme, the year’s high-profile advanced biofuels IPO, as well as Gevo (producer of isobutanol as a “drop-in” for gasoline and chemicals used in manufacturing), KiOR (converting forest-based biomass to crude oil), and BrightSource (large-scale solar developer), are all energy generation companies. The fifth IPO, Silver Spring Networks, in the industry products and services sector, is a smart grid software provider.

These companies have something else in common, too:  four of the five are based in the San Francisco area. While northern California has long been a hot clean-tech market, both Massachusetts and Colorado – the home of Gevo – have also taken big steps towards establishing themselves as clean-tech ‘innovation clusters,’ seeing venture capital investment increases of 63% and 28% respectively.

2 responses to this post.

  1. [...] We wrote about trends in venture capital and IPOs for clean technology companies in February in a post recently linked to by The Atlantic, seeing energy storage and generation companies faring well in [...]

    Reply

  2. [...] investment in clean technology has slowed and changed. It’s hard to build companies around new, more expensive ways of making a [...]

    Reply

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