US venture capital investments in Cleantech rose 12% in 2011, despite a challenging international economic climate and growing supply of and low price for natural gas.
Since 2008 NG price peaks in the $13 range, price per MCF has dropped to the $3 level as supplies from shale have expanded from 6% to nearly 30% of US capacity, due to improved fracking methods.
The low price for the relatively clean energy source has had a significant impact on the competitive positions of both solar and wind, two components of the Cleantech sector.
Both dollars and deal volume increased in 2011, to bring the year's total to the highest level recorded—at $4.3 billion across 323 deals, compared with $3.8 billion going into 289 deals in 2010, according to The Money Tree Report from PWC.
According to Tracy T Lefteroff, global managing partner of the venture capital practice at Price Waterhouse Coopers, “We saw a resurgence in investments in clean technology and internet-specific companies in 2011, as well as a bit of a jump in average funding in the internet sector. However, while venture capitalists continue to show their interest in these areas, they are acting prudently and not chasing excessive valuations. Accordingly, despite the increase in investing, we're unlikely to see these sectors overheat like we saw in the 1999 to 2000 era.”
“The 2011 cleantech numbers are very strong from a dollars invested and deals perspective, surpassing investment levels not seen since 2008,” Jon Sadoka, partner at VC firm NEA said. “In spite of volatility and perception of the sector we've seen a strong recovery from VC investments primarily driven by the growing global demand for clean, cheap, renewable power and technologies that enable societies to use energy more efficiently.
“We're tracking two trends in the 2011 numbers which are representative of the investment trends we'll see in 2012. The first is significant late stage investment activity in emerging market leaders who generally have plans for near-term IPOs. There continues to be an abundance and concentration of capital for companies that have innovative products that are scaling globally .
“The winners and losers are becoming more clearly defined and while those who are in the number one position are clearly able to raise substantial amounts of capital those who are in second and third place are really struggling to get financing.”
Sadoka reports that investor activity had increased in energy efficiency, LED lighting, energy storage and transportation. He also said that although 10 companies had already registered an SEC filing, he knew that there was a stronger pipeline of companies wanting to go public this year.
“Our outlook for 2012 is cautiously optimistic - we are seeing a very slow and steady recovery in the Cleantech sector. In 2011 the Cleantech sector definitely saw the impact of global slowdown in economic growth and the European debt crisis.
“Stronger recovery in the economy, stability in the European debt crisis and currency and increasing global demand will boost Cleantech sector in 2012.”
