Venture capital investment in U.S. renewable energy startups and other cleantech companies hit $961.7 million last quarter, up 41 percent from the first three months of the year, according to an Ernst & Young LLP analysis of Dow Jones financial information.
The nearly billion-dollar cleantech investment -- a quarterly record -- came as overall venture capital investment slipped 8 percent, oil spiked above $140 a barrel and the U.S. economy slowed. Compared with the second quarter of 2007, cleantech investment for the April through June 2008 period was up 83 percent, Ernst reported today.
Solar photovoltaic manufacturers and other energy generation companies were largely responsible for the cleantech sector's strong showing. Such companies netted 52 percent of the quarterly investment, or almost $495 million.
Energy efficiency companies ranked second in the sector, pulling in 20 percent of the quarterly investment. Joseph Muscat, Ernst's Americas director for venture capital and cleantech, noted that "smart" energy meters and other technologically mature and readily deployable technologies are particularly attractive to investors.
"Investment in increased efficiency can have a shorter payback period, since many of these technologies are relatively capital-efficient compared to the capital intensity of a manufacturing-heavy segment like biofuels," Muscat explained.
Ernst's analysis tracks closely with a recent report by the National Venture Capital Association and PricewaterhouseCoopers, which looked at Thompson Reuters data.
The latter report noted that venture capitalists invested $7.4 billion in 990 U.S. deals in the second quarter, down slightly from $7.5 billion in the first three months of the year. Despite the relatively flat pace of investing through the first six months of 2008, venture investing is on target to hit about $30 billion for the full year -- about the same as in 2007, PricewaterhouseCoopers and NVCA analysts noted.
Growth in cleantech and Internet-specific sectors is a key factor, they explained.
The two top deals of the second quarter were solar energy companies: In June, Beltsville, Md.-based SunEdison raised $131 million in private equity from Greylock Partners, MissionPoint Capital Partners and other investors; two months earlier, the Pasadena, Calif.-based startup eSolar Inc. raised $130 million from Idealab, Oak Investment Partners and Google's philanthropic arm.
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