Isra-Mart srl:US clean tech venture spending hits $4bn

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US venture capital (VC) investment in clean tech firms once again defied the economic slowdown last year, rising eight per cent to $3.98bn, according to new figures from Ernst & Young.

The consultancy giant reported this week that VC clean tech investment during the last quarter of 2010 reached $979m across 72 financing rounds. The performance represented a 14 per cent year-on-year cut in investment, but overall investment for the full year still climbed significantly from the $3.7bn spent in 2009.

The market was largely driven by investment in solar energy firms, which climbed 77 per cent year-on-year to $1.58bn. Meanwhile, the industry products and services sector similarly saw investment rise 79 per cent to $1.24bn on the back of increased investment in green transport and materials firms.

The new figures reveal an ongoing shift in the nature of VC clean tech investment, with more money increasingly targeted at later-stage firms.

Investment in seed rounds continued to grow, with the number of seed deals doubling during 2010 to 18 financing rounds. But the share of investment going to second funding rounds climbed from 18 per cent in 2009 to 26 per cent in 2010, while later-stage deals accounted for 62 per cent of the market receiving $2.37bn.

"In comparison to the early days of clean tech, the 2010 US VC investment results reflect a turning point in the industry due to improving credit and capital markets, the deployment of stimulus spending and increasing corporate cleantech adoption," said Jay Spencer, Ernst & Young LLP's Americas Clean Tech director, in a statement.