The amount of venture capital invested in clean technology companies topped €1bn last year and the upward trend is showing no sign of slowing, according to new research released today.
The report from investment research firm Library House revealed that €400m of venture capital money was invested in 95 clean technology firms last year taking the total invested in Europe to over €1bn.
Overall 217 clean technology companies are now venture backed in Europe, according to Library House, with 40 percent located in the UK. The companies cover a wide range of different technologies, including renewable energy solutions, material innovation and other technologies designed to reduce carbon emissions.
Doug Richard, chairman and CEO of Library House, which specialises in providing information on innovative fast-growth private companies, said that the upward investment trend was set to continue. "Our latest numbers show there is no sign of venture capital interest waning," he said.
Darren Harper, head of the data and information team at Library House, added that the interest in green technology investments was also well spread across the whole sector. "We assess the whole energy supply chain: upstream technologies like alternative fuels, generation technologies like solar panels or wind turbines, infrastructure innovation like new batteries or fuel cells, right through to end user technologies that reduce energy consumption and enhance efficiency," he said. "The investment, especially in the UK, is reaching every part of the energy chain."
In fact, contrary to concerns expressed at this week's Tyndall Centre conference on financing green technologies Richard argued there was now little problem finding backing for green inventions. "They'll be a lot of money invested this year," he said. "If you are delivering innovations in clean technology now is the time to look for capital – we want to find out about these companies."
He added that if there is a risk of an investment slowdown then it comes from a lack of start ups, rather than a change in investors' attitudes or an absence of venture capital. According to some commentators (see the January 14th post at the Cleantech Investing blog) this scenario is beginning to emerge in the US where investors simply can not find enough green technology companies to back.
Richard also warned that if venture capitalists are to see strong returns on their investments there will have to be a maturing of the clean technology market – something he predicted would begin to happen this year.
"At the moment the Cleantech market resembles the IT industry 20 years ago," he explained. "The landscape is full of component solutions and no commercial packages. The next step will be to see solution providers and packaged offerings that are easy for consumers to buy and understand."
"In addition, we need to see innovation companies scale up and commercialise their own innovation offerings in the face of the innate conservatism of project-finance lenders who are reluctant to lend to projects whose advantage lies in innovation. This could well mean that some big players emerge in the next 12-18 months."
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