European cleantech on track for record quarter

Venture capital investment in European cleantech firms could reach record levels this quarter, according to research firm Library House, which today released its annual list of the top 100 cleantech firms in Europe.

The company said that a number of big deals, including €85m (£67m) of fresh backing for German solar giant Sulfurcell Solartechnik, meant that this quarter could break the previous record of €260m achieved in the fourth quarter of 2007.

Richard White, senior cleantech analyst at Library House, said that the market was showing strong signs or recovery after a "dismal" first half of the year during which concerns over the state of the economy saw venture capital cleantech investment during the second quarter drop to just €75m.

"The recovery is partly down to a number of deals coming through at the same time, but also because of the preponderance of larger follow-up deals that more mature companies are attracting," he explained. "The number of deals for the third quarter will be up slightly but the average size of deal has increased quite significantly."

The research echoes similar findings from the other side of the Atlantic, where earlier this week analyst Topline Strategy Group unveiled similar figures showing that an increase in larger follow-up deals had seen investment climb to record levels during the second quarter of the year.

White said it was unclear whether the recovery would continue into the fourth quarter given the financial turmoil unleashed in the past week. But he argued that venture capital investment should remain relatively well insulated against the worst of the problems being experienced by the financial markets.

"Who can say what will happen in the fourth quarter?" he said. "The theory goes that venture capital should be OK because it is not based on credit and the money to be invested up to the end of the year has already been raised. However, psychological factors do play a role and there may be some caution among investors."

The Top 100 report, which was published in today's Guardian newspaper, also revealed that while Europe continues to lag behind the US in terms of investment levels, it is carving out leadership positions in a number of key technologies.

German solar firms dominate the list with 10 entries, including three companies in the top 10 in the form of Odersun, SiC Processing and Sulfurcell Solartechnik.

Meanwhile, the UK appears to have developed a leadership position in the field of marine renewables, with six firms representing the only marine players on the list.

White said that the UK's leadership position was being built on many of the skills developed through its North Sea oil operations and meant that the country was now well positioned to exploit a potentially huge global market.

"We are now at the stage where these firms are beginning to install commercial-scale sites. Once they are proven and have clear prices and maintenance costs attached, we will be in a position where the global market for these technologies could expand rapidly," he said.