Green-tech VC funds surge in 2Q

Venture capital investors chasing promises of stimulus funds poured 40% more money into “green technology” startups in 2Q09 vs. than the prior quarter, according to numbers released by Greentech Media.

July 1, 2009 – Venture capital investors chasing promises of stimulus funds poured 40% more money into “green technology” startups in 2Q09 vs. than the prior quarter, according to numbers released by Greentech Media. Eighty-five deals were signed totaling nearly $1.2B, up from 59 deals and $836M in 1Q09.

Solar power again led investments with a little more than a quarter of all funds, but overall investments were distributed more evenly than before. Automotive and energy storage were two notable sectors with increased fundings, the report notes.

Key to pushing more funds across the table was the lure of stimulus funds as “a non-dilutive funding source,” the report notes. Most went to early- and late-stage investments, and average funding amounts were a bit smaller — no giant $100M rounds as in 2008 for things like solar or biofuel.

“Despite the economic slump, VC investors remain optimistic about the greentech sector and eventual exits in this space,” said Eric Wesoff, senior analyst at GTM Research and author of the report, in a statement. And investors are starting to believe again that credit markets and the economy in general are “on the road to recovery,” added John Rockwell, founder and managing director of Element Partners.

Looking at 2009 in general, Wesoff sees this as “a year of consolidation and development,” while 2010-2011 “will be the year greentech breaks” — look for IPOs and M&A of VC-funded firms in solar, smart grid, green buildings, and biofuels, he said.


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2Q09 greentech VC investments by sector. (Source: Greentech Media)

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