Green investments looking bright

VCs are seeing green when it comes to clean technology.

The Cleantech Venture Network announced last week that North American venture firms disbursed a record $502 million to cleantech companies during the fourth quarter of 2005, more than an 18% increase over the previous quarter and a nearly 60% increase over the same quarter in 2004.

Overall, venture firms invested $1.6 billion in cleantech last year, compared to slightly more than $1.2 billion the year before.

“We saw consistent upward growth in the amount of investment, the number of investors and the range of things invested in,” said Nicholas Parker, chairman and co-founder of the Ann Arbor, Mich.-based Cleantech Capital Group, the parent company of the Cleantech Venture Network and the manager of the Cleantech Index on the American Stock Exchange

The cleantech sector encompasses a wide range of technologies related to water purification, air quality, nanotechnology, alternative fuels, manufacturing, recycling and renewable energy such as solar, wind and hydrogen.

In the fourth quarter, energy-related technologies made up the bulk of the cleantech sector, raising about $179 million, or more than one-third of all cleantech deals.

The next most-invested categories include materials and nanotechnology, which raised $97 million combined, and manufacturing and industrial technologies, which raised $61 million combined.

In the fourth quarter, the average deal size grew to $6.9 million, up 11.5% over the third quarter, the Cleantech Venture Network said. A total of 73 cleantech deals were signed in the fourth quarter, the network said.

The top deals included nanotech company Nanosys, which raised $40 million; plant biotech company Cellfor, which raised $32 million; and fuel cell firm Lilliputian Systems, which raised $30.2 million.