Cleantechnology investments plunged by 41% in the first quarter of 2009, across North America, Europe, China and India, according to the latest research from The Cleantech Group.
Having peaked at US$2.6bn in Q3 2008, the initial quarter of 2009 saw the sector only secure US$1bn in investment. Cleantech looks to be in trouble as the decline has continued for two consecutive quarters and has seen a fall of 48% from the same period last year. Average round size shrunk from US$20m in Q3 2008 to US$12.3m in Q1 2009.
The gloom of early 2009 also affected M&A activity. There was an estimated 111 transactions in the first quarter, in which 25 totalled US$3bn. This is a 42% drop from Q4 of 2008, which saw 134 M&A transactions, of which 45 totalled US$4.8bn.
Although recent data indicates that cleantech is in for a turbulent year, hope is emerging from government allocations. At the latest G20 summit, it was predicted that US$400bn of the US$2.6tn economic stimulus package would be earmarked for clean technologies. Utilities and corporations are also said to be intent in aiding the development of the sector.
By sector, solar faired best in Q1 raising US$346m in investment. Biofuels lagged behind with US$96m, followed closely by advanced batteries and electric vehicles.
In terms of geographic allocations, the US took the lions share with 68% of the total with Europe and Israel reaching 28% and China, 2% and India 1%.
European and Israeli companies raised US$281m in 31 disclosed rounds, down 11% from Q4 2008 and down 31% from the same period last year. But despite the local reduction, Europe and Israel increased its overall global investment to 28%, up from 19% in Q4 2008.
Senior director of research at the Cleantech Group, Brian Fan, said: “Cleantech financing is moving into a new phase, characterised by diversified funding sources, as the global recession and liquidity issues impact venture investors. Venture funds continue to invest significant sums, albeit at a slower pace and smaller scale than in the past two years.”
The most active venture funds in Q1 2009 included Kleiner Perkins Caufield & Byers with four rounds, 21Ventures, CMEA Ventures and Quercus Trust, all with three rounds.