Clean tech venture investment falls to $1bn during first quarter

Venture capital investment in clean tech firms in North America, Europe, China and India unsurprisingly slumped during the first quarter of the year, falling 48 per cent year-on-year to $1bn according to new figures from analyst the Cleantech Group.

The value of the average funding round also fell from a high watermark of $20m (£14m) during the third quarter of 2008 to just $12.3m during the first quarter of this year.

Brian Fan, senior director of research at the Cleantech Group, said that the global recession and liquidity issues had inevitably led to reduction in the pace and scale of lending, although he added that venture funds continued to invest significant sums.

The report said that although the amount of venture capital invested in the first quarter had reached its lowest level in two years, there were still some major deals with $346m invested across the solar sector, $96m ploughed into biofuel firms and $90m going to advanced battery companies, including $55m for lithium-ion battery start-up Boston Power.

In addition, there were more than 100 mergers and acquisitions in the clean tech space over the three-month period, while three companies even managed to pull off initial public offerings (IPOs). In the largest of these, China Singyes Solar Technologies Holdings raised $8.1 million on the Hong Kong Futures Exchange.

The report also found that governments and utilities were increasingly keen to plug the funding gap left by the retreat of some venture capital firms. An estimated $400m will be invested in the sector through governments' various economic stimulus packages, while Scott Smith, leader of clean tech at consultancy Deloitte, said there was growing evidence that utility companies were looking to invest in the sector.

"[Utilities] investment plans range from building and operating solar and wind systems to financing third party, shovel-ready projects," he observed. " These moves underscore clean tech's emergence as a significant and maturing market that will remain highly relevant – both during and following the economic downturn."