Energy futureVCs invest $3 billion in clean tech in 2007

Published 4 March 2008

VCs investment in clean tech in 2007 increased 43 percent over similar investments in 2006; U.S.-based companies received $2.52 billion, or 83 percent of the total, in 159 clean-tech deals

We reported yesterday that an Israeli start-up Project Better Place designing an electric car was the largest single recipient of VC clean-tech funding in 2007 (the company raised $200 million in first-round funding). Red Herring’s Justin Moresco writes that venture capitalists invested a record $3 billion worldwide last year in clean-tech companies, a 43 percent increase over VC activity in 2006 and an indication that the industry is ripe for innovation and growth. U.S.-based companies received $2.52 billion, or 83 percent of the total, in 159 clean-tech deals, according to data released on Friday by Dow Jones VentureSource. This represented a 79 percent increase over investment in 2006 and accounted for more than 8 percent of total U.S. venture investment in 2007.

European companies grabbed $360 million, or 12 percent of the global total, in 56 deals. That marks a 27 percent increase over investment in 2006. Investment in China, however, declined from $424 million in 2006 to $129 million in 2007 in six deals, accounting for 4 percent of global clean-tech venture investment. Data on deals in Israel and India were not released since the countries accounted for less than 1 percent of global investment in clean tech, Dow Jones said. One highlight of the report was that 59 percent of U.S. investment in the clean-tech sector went toward companies in the product development phase. This “suggests that funding for clean technologies is likely to continue as these companies continue to develop and start generating revenues,” Jessica Canning, director of research for Dow Jones VentureSource, said in a statement.

In January, the Cleantech Group released its estimates for VC investment worldwide into clean tech companies. The research group came up with $5.18 billion in 2007, a figure 72 percent higher than Dow Jones’ estimate. Thomson Financial and the National Venture Capital Association, however, have estimated figures that are more in line with those of Dow Jones. They found that clean-tech VC investments for the first three quarters of 2007 had reached $2.6 billion worldwide. Once the fourth quarter is factored in, their numbers should match closely with Dow Jones.

Here is is a breakdown by sector of global VC investment in clean tech according to Dow Jones’ research: