Cleantech Network reports record high investment levels for environmentally sound technologies
Investor support for clean technologies reached a new record high as venture capitalists in North America and Europe invested a record $1.74 billion in the third quarter of 2007. This brings the year-to-date level of investment in cleantech to $3.64 billion, a 13% increase over the same period in 2006, the Cleantech Network(TM) reported at last month's international Cleantech Forum XIV in Toronto.
This quarter also set a new record for cleantech investment in Canada, with the country investing $109 million. The Cleantech Network said this third-quarter total was 85% higher than the amount invested over the entire first half of 2007 in Canada.
During the third quarter (Q3), North American venture capitalists invested close to $1.3 billion, representing a 50% increase over the second quarter (Q2) of 2007 and 36% increase over Q3-2006. Their European counterparts invested $472 million representing a 206% increase over Q2-2007 and a 13% decrease from Q3-2006.
The energy generation segment continues to lead other segments within the cleantech category with $1.2 billion invested in Q307. Of the $1.2 billion, $901 million came from North American venture capitalists, a 106% increase over Q2-2007 and a 52% increase over Q3-2006. European venture capitalists invested $315 million, showing a 222% increase over Q2-2007 and a 31% decrease compared to Q306.
The Cleantech Network also reported continuing dominance of the two leading energy generation segments, solar and biofuels. Solar investment during Q3-2007 reached $410 million in North America, a 16% increase over Q2, and $246 million in Europe, a dramatic increase over the $15 million invested in Q2-2007. Biofuels companies raised $215 million in North America and $16 million in Europe.
Investments in water and wastewater showed a promising upward trend on both continents, with investment in clean water technologies increasing by 146% over Q2-2007.
"The combination of a rapidly improving pipeline of venture grade deals, favorable public policy trends and growing consumer awareness of climate change continue to point to a positive outlook for the future growth of clean technologies," said Nicholas Parker, chairman and co-founder of the Cleantech Group, parent company of the Cleantech Network. "While investments in energy generation remain strong, we're encouraged to see increasing interest in water and transportation technologies as pressures on fresh water supply and concern over CO2 emissions continues," he added.
The Cleantech Network is an international membership group comprising more than 8,000 cleantech investors and 9,500 companies worldwide. The organization catalyzes investment, business opportunities and relationships driving the worldwide growth of environmentally sound technologies. The network takes credit for popularizing the term "cleantech" in 2002 and defining the category, and has been providing investors, executives, government agencies and media accurate and consistent data dating from 1999. More information is available on the Cleantech Network Web site, http://cleantechnetwork.com.
The network's findings were reinforced by a study from Ernst & Young and Dow Jones VentureOne which estimated that venture capital investment in cleantech companies for 2007 will likely increase more than 35% over last year. Their mid-year research found that global venture capital investments in clean technology companies surged to $1.1 billion (U.S.) in the first six months of 2007 alone. The largest number of investments was in the U.S., where 71 transactions were completed in the first six months of 2007; together, these deals raised more than $893 million (U.S.). In Europe, investments are on track to reach or even surpass 2006 levels, with 19 transactions completed and $80 million (U.S.) invested during the first half of 2007.
Moreover, says the study, cleantech's share of overall venture capital investments worldwide has more than doubled since 2001. In the US, clean technology's share of investment increased from 1.4% in 2001 to 5.4% in the first six months of 2007. Similar robust growth in this area has occurred in Europe, where cleantech's share of investment has risen from 1.6% in 2001 to 4.4% in first half of 2007.
"Clean technology has moved from vision to reality, and it's now a priority on the CEO agenda of every company from the entrepreneurial growth companies to the multinational market leaders," said Gil Forer, global director of Ernst & Young's venture capital advisory group. "The accelerating venture capital investments reflect the growing importance of the sector. A strong innovation pipeline and confidence in the global drivers supporting growth in the clean technology market - such as government policies, consumer awareness, energy prices and concern about carbon emissions - are driving venture capital investment," he added.
In terms of segment focus, solar is dominant in the U.S., with alternative fuels also on the rise. In Europe, alternative fuels continue to predominate, with wind power accounting for a fair share of the total amount invested.
"When a sector sees year-over-year investment growth of 70%, and attracts more money than semiconductors in the U.S., you know it has truly arrived," observed Jessica Canning, director of global research for Dow Jones VentureOne.