Cleantech venture funding hits $2.57 billion in quarter

BOSTON Tue Apr 5, 2011 5:39pm BST

A general view of the BrightSource Energy's Solar Energy Development Center (SEDC) is seen in Rotem Industrial Park near the southern town of Dimona June 12, 2008. REUTERS/Ronen Zvulun

A general view of the BrightSource Energy's Solar Energy Development Center (SEDC) is seen in Rotem Industrial Park near the southern town of Dimona June 12, 2008.

Credit: Reuters/Ronen Zvulun

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BOSTON (Reuters) - Venture capitalists invested $2.57 billion in the clean technology sector in the first quarter, up 13 percent from a year earlier, with most of the money going to companies involved in solar power.

That was the most money invested into the space since the third quarter of 2008 -- when the financial crisis started -- a report from the San Francisco-based consulting company Cleantech Group LLC said on Tuesday.

The overall number of deals, at 159, was the lowest since mid-2009, meaning that investors were making fewer but larger bets.

"You're seeing a much, much larger average deal size, which just indicates a much stronger bias toward later-stage, bigger-check deals," said Sheeraz Haji, chief executive of San Francisco-based Cleantech, adding that investors are showing less interest in early-stage "pre-product, pre-revenue" companies.

Overall, the sector is on pace to raise the most money since Cleantech started tracking it in 2002, Haji told reporters on a conference call.

"We'll have a record year overall," he said. One helpful factor is the recent spate of successful green-company initial public offerings, including electric vehicle maker Tesla Motors.

The solar sector drew $641 million in capital, with the largest chunk going to BrightSource Energy Inc, a developer of solar fields. Investors see that company as likely to seek an IPO this year.

After solar, the largest flows of money went to companies developing electric vehicles, which drew $311 million. The largest investment in that area went to Fisker Automotive, a maker of luxury plug-in hybrids, which raised $150 million from a group of venture funds as well as battery maker A123 Systems Inc.

The volume of mergers and acquisitions in the space hit $15.3 billion in the quarter, lifted by DuPont Co's $6 billion takeover of Denmark's Danisco, a deal that was announced in January but has not yet closed.

The most active investors by number of deals were Kleiner Perkins Caufield & Byers, Vantage Point Venture Partners, the venture capital arms of General Electric Co and Google Inc, and Khosla Ventures.

(Reporting by Scott Malone; editing by John Wallace and Matthew Lewis)