Sep 26, 2013

Cleantech investment: A decade of California's evolving portfolio

(Nanowerk News) A new analysis of the last decade of investment in California’s clean technology sector shows that although venture capitalists remain key players, different types of investors are becoming ever more important to the growth of the sector.

“Of the $2.6 billion of cleantech venture capital investment in 2012 in California, $1.45 billion included corporate investors,” according to "Cleantech Investment: A Decade of California’s Evolving Portfolio, a survey of California greentech investing between 2003 and 2013" from Next 10, an independent California nonpartisan/nonprofit research organization. That corporate portion was 56 percent of 2012 VC investment.

Other key findings from this report include:

While many focus on VC investment as an indicator of growth in the sector, it is important to expand that view as cleantech products and services move toward deployment.

Development & Growth investment contributed to the expansion of the cleantech sector over the last decade. This direct investment into California startup companies is more than three times higher in the first half of 2013 compared to the first half of 2003. More recently, investment in Development & Growth in California slid about 44 percent from the second half of 2012 to the first half of 2013 (from about $1.5 billion to $870 million). Venture capital specifically decreased less than Development & Growth overall, down about 22 percent in the same period (from $870 million to $680 million).

Project financing for the deployment of cleantech products was more than three times higher in 2012 than in 2007. California’s estimated share of project finance investment in the United States rose above 40 percent in the first half of 2013, though investment levels were down from the spike in the second half of 2011 and down about three percent from the second half of 2012.

Despite the drop-off since the peak of investment in 2010 and 2011, there are twice as many VC and corporate investors involved in the cleantech sector today than in the first half of 2003, when the industry was just taking off.

Corporations play a pivotal role as strategic investors in cleantech companies. Over the last ten years, the number of VC deals with corporate involvement has increased and at least 24 percent of cleantech VC deals had corporation participation over the last three years. In the last decade, the average VC deal amount has been an average of 48 percent higher if corporations were involved in the round.

Source: Next 10