While venture capital investments in cleantech – or renewable energy technology such as solar – showed a slight decline between the second and third quarters of 2003, the down numbers aren’t so dark.
In fact, cleantech advocates say not only is cleantech stable, but that the sector is charged up and is poised to raise big dollars in 2004.
Cleantech in 2003 should finish the year with more than $1.3 billion invested, slightly ahead of 2002, according to a study released last week by the Cleantech Venture Network, an Ann Arbor, Mich.-based organization backed by private equity investors in clean energy technology.
Overall, 52 North American companies in the cleantech sector received venture funding in the third quarter of 2003, compared to 42 in the previous quarter. The average deal size decreased to slightly more than $6.1 million, down from an average of $8.2 million per deal in the second quarter, but the number of deals increased by 20%.
“The good news for clean energy technology is that it’s back,” says Nicholas Parker, co-founder and chairman of Cleantech Venture Network and a senior advisor with Canada’s OPG Ventures.
Parker attributes the rise in clean technology to a number of new investors in the sector, coupled with heightened media interest.
One such new investor is Braemar Energy Ventures, a venture firm focused on energy technology, which expects to close its premier fund between $70 million and $100 million in the first half of 2004. The New York-based firm held a first close on $35 million in December 2002.
The worldwide clean energy market is forecast to grow to $89 billion by 2012, a nine-fold increase from $9.5 billion in 2002, according to Clean Edge Inc., an energy research and consulting firm based in Oakland, Calif.
Parker predicts that investment in cleantech could reach $2 billion in 2004. He is also confident that there will be more venture investors calling cleantech a sector of choice.
“We’ll continue to see new entrants in the cleantech space next year with a number of these new entrants putting cleantech more explicitly into their list of core areas,” he says. “They dabbled in 2002 and 2003, and in 2004 they’ll have the capacity to project a solid interest in the area.”
Canada’s Hydro-Quebec CapiTech and OPG Ventures were the most active cleantech investors in the third quarter of 2003 with three deals each.
The two energy investors also invested in the $15 million Series B round of Solicore, which develops and provides high-energy rechargeable batteries for industrial and consumer markets. Air Products and Chemicals, Braemar, Draper Fisher Jurvetson (DFJ) and Firelake Strategic Technology Fund also participated in that deal.
Both Braemar and Hydro-Quebec CapiTech invested in the $2.6 million Series A round of Boston-based Enernoc, which provides software and managed services to distributed generation energy companies. DFJ and Draper Fisher Jurvetson New England participated in the round, which closed in June.
Notable global deals include Amperex Technology Ltd., a Hong Kong-based battery manufacturer, which raised $30 million in a Series B funding led by The Carlyle Group with a $22.5 million investment. The 3i Group also funded the round.
And Power Paper, a Tel Aviv, Israel-based provider of micro-power source technology and devices, raised $12 million in a Series D round of funding.