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VC spend goes green in 2008
Solar investments in spotlight

By Dawn Kawamoto

Published: Wednesday 07 January 2009

Green-tech venture capital funding soared last year, aided by megadeals in thin-film solar companies, according to preliminary figures released Tuesday by the Cleantech Group.

During 2008, green-tech venture investments jumped to $8.4bn, a 38 per cent increase, according to the report.

Solar investments helped drive the growth, capturing 40 per cent of green-tech investments. Thin-film solar deals did particularly well, capturing the three largest investments in green technology last year.

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NanoSolar raised $300m last year, followed by Solyndra with venture investments of $219m and SoloPower with $200m.

Cleantech Group's senior research director, Brian Fan, said in a statement: "2008 saw solar take a 40 per cent share of clean-technology venture investment dollars, led by mega investment rounds in thin-film solar, concentrated solar thermal, and solar-service provider companies."

"Investors also continued to migrate from first-generation ethanol and biodiesel technologies to next-generation biofuels technologies, led by algae and synthetic biology companies. Other sectors with healthy investor interest included smart-grid companies, small-scale wind turbines, plastics recycling, green buildings, and agriculture technologies," Fan said.

Following solar-energy firms in attracting VC dollars were companies specialising in biofuels such as ethanol, biodiesel, synthetic biology and algae. The sector captured 11 per cent of green-tech venture investments last year, while transportation companies, such as makers of electric vehicles, advanced batteries, and fuel cells, accounted for 9.5 per cent.

US-based companies raised the most green-tech venture funding, landing $5.8bn among 241 disclosed investments. This group also posted the largest gain last year, marking a 58 per cent funding increase over the previous period.

European and Israeli companies followed, raising $1.8bn amid 146 disclosed rounds, marking a 47 per cent increase.

Chinese companies raised a total of $430m in green-tech investments in 18 rounds, marking a 22 per cent increase over the previous year. And Indian companies landed $277m in 14 disclosed deals, a 20 per cent increase.

And while green-tech venture investments were up for the year, preliminary fourth-quarter results marked a downturn from last year and the previous quarter, according to the report.

The fourth quarter accounted for $1.7bn worldwide, down four per cent from last year during the same period and a 35 per cent decline sequentially.