Venture capital sweeps into clean-tech industry


Venture capitalists spent the first quarter of the year dousing the clean-tech industry with more money, hiking investment in solar and other green companies.

Though the number of deals fell to 69 from 79, companies raised $1.1 billion in the first three months of 2011 compared with $743.3 million in the same period last year, according to a report released Monday.

The top 10 deals alone drew more than 60% of the total haul; the two largest accounted for 18% of nationwide investment, according to Ernst & Young and data from Dow Jones VentureSource.


MiaSole, a Santa Clara, Calif., company that makes thin-film photovoltaic solar panels, raised $106 million in one deal in February and is considering offering shares to the public.

“You have companies that have been around for a number of years and have weathered the storm and are actually generating revenue with very promising technologies,” said Mark Sogomian, a partner and Los Angeles clean-tech leader at Ernst & Young. “That’s enticing to the venture capital community, which believes that the sector can grow significantly.”

In the uncontested lead since at least 2005, California had by far the most deals — 30, compared with seven in Massachusetts. The state’s clean-tech companies attracted $637 million in investment in this year’s first quarter, up nearly 42% from a year earlier.

But Northern California pulled most of the weight. The region’s 24 deals brought in $505 million, compared with 32 deals worth $332 million in the same period last year.

A comparatively measly six deals in Southern California totaled slightly more than $132 million — $84 million from the Los Angeles metro area, $48 million from San Diego and a sliver from Orange County.

The energy generation sector was the biggest player in the quarter, reeling in $450 million compared with $158 million a year earlier. Solar power companies alone hooked $363 million, up from $139 million.


Energy storage was also hot — venture capitalists put in $262 million, a 670% increase from the $34 million raised during the first quarter of 2010. Both the battery and fuel cell segments saw similar booms.

The $50 million poured into natural gas companies in the first quarter exceeded the $40 million invested in all of 2010.

Investors are encouraged by the momentum in the industry as clean-tech companies steadily grow into initial public offerings of stock. In March, South San Francisco algae biofuel company Solazyme Inc. filed for a $100-million IPO, following the lead of competitors such as Amyris of Emeryville, Calif., which went public last year.