Huge drop in clean-tech venture funding

May 13, 2009 By Tracy Seipel

Investments in clean-tech startups plummeted in the first quarter of 2009 compared with recent quarters, according to a report issued this week by Ernst & Young.

After a record year in 2008, U.S. venture capital funding in clean tech during the first quarter -- $277 million raised in 24 deals -- was down 63 percent in capital and 48 percent in deals compared with the same period in 2008.

"The economy has taken a significant punch in the stomach in the last nine months," said Erik Straser, who leads the clean-tech investment team at Mohr Davidow Ventures in Menlo Park, Calif. "Why would this be any different?"

There were signs of hope.

"Despite the intense challenges of raising capital during the past four months, government initiatives and corporate commitments are points of light for clean-tech companies," said Joseph A. Muscat, Americas Director of Cleantech at Ernst & Young.

Among the report's highlights:

The energy storage segment more than doubled the $50 million raised in the first quarter of 2008 to $114 million in first quarter 2009, making it the largest category of clean-tech investment for the period.

Within the energy storage segment, battery-storage companies raised $69 million, a 37 percent jump from the same period in 2008.

Fuel cell companies raised $45 million, compared with no investment in the same period in 2008.

Energy/electricity generation, the quarter's next-largest investment category, raised $56 million in the first quarter, down 73 percent from the same period in 2008. Solar companies accounted for the majority of activity in this category, raising $48 million.

Notably, some companies made strides during the challenging period, even as local solar companies SunPower and Akeena Solar posted disappointing first-quarter earnings.

Google and announced a prototype software of Google PowerMeter, a consumer home smart grid application targeted for completion by the end of 2009.

Meanwhile, Royal Dutch Shell said it will increase its stake in Redwood City, Calif.,-based biofuel company Codexis.

And a Department of Energy grant was recently awarded to Fremont, Calif.,-based Solyndra, a manufacturer of cylindrical photovoltaic systems that plans to use the $535 million loan to expand its solar panel manufacturing capacity in California.

Said Muscat: "This economic climate demands that clean-tech companies think more creatively about resources and partnerships, as government becomes an increasingly important constituent in the clean-tech market."

Ernst & Young's figures show a similar trend to those released last month by the Cleantech Group, a San Francisco researcher that uses a broader definition of clean tech that includes more companies. For the first quarter, the Cleantech Group reported $650.5 million in venture capital raised by U.S.-based clean-tech companies, down 44 percent from the $1.15 billion raised in the fourth quarter of 2008.

"Most of the things we track were down, and down significantly," said Brian Fan, senior director of research at the Cleantech Group. Among segments that did well were electric vehicles, batteries (particularly lithium-ion) and fuel cells.


(c) 2009, San Jose Mercury News (San Jose, Calif.).
Visit Mercury Center, the World Wide Web site of the Mercury News, at
Distributed by McClatchy-Tribune Information Services.

Explore further: Amazon unveils move in local services

Related Stories

Tech offers relative job security, statistics show

Apr 01, 2009

Despite layoffs at tech stalwarts like Google, IBM, Microsoft and Electronic Arts, the impact of the recession on the tech industry is likely to be far less severe than on other areas of the economy, recent labor statistics ...

Solar industry faces head winds but remains hopeful

Jan 22, 2009

Solar-industry executives paint a bright future for their industry, one where photovoltaic panels adorn roofs of homes and businesses and huge power plants capture the sun's rays to generate electricity. But the industry ...

High-tech layoffs climb in first quarter

Apr 06, 2009

During the first three months of 2009 the high-tech sector in the U.S. suffered its deepest layoffs in seven years, according to a firm that tracks the jobs market.

Web ad revenue grew in 4Q but slower than in past

Mar 30, 2009

(AP) -- U.S. Internet advertising revenue climbed in the fourth quarter in spite of the poor economy, but the growth rate was sluggish compared to previous years, according to an analysis released Monday.

Mobile phone sales up six pct in 2008, 4th qtr weak

Mar 03, 2009

Mobile phone sales grew by six percent in 2008 over the previous year but fell nearly five percent in the fourth quarter as the global economy weakened, market research firm Gartner said on Tuesday.

Recommended for you

Amazon unveils move in local services

1 hour ago

US online giant Amazon said Monday it was launching a services marketplace offering to connect consumers with businesses offering anything from home improvement to piano lessons.

Intel in talks with Altera on tie-up

Mar 27, 2015

US tech giant Intel is in talks with rival Altera on a tie-up to broaden the chipmaker's product line amid growth in Internet-connected devices, the Wall Street Journal reported Friday.

Apple chief Cook to give his wealth away: Fortune

Mar 27, 2015

Apple chief Tim Cook is joining Mark Zuckerberg, Bill Gates and other technology titans who have vowed to donate their wealth to charities, according to a report in Fortune magazine.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.