The Top Five Cleantech Stories of 2011, Part I

By Zach Hiatt

The end-of-year holidays are all about family gatherings, religious celebration, retail mania, and of course, lots and lots of calories! But they are also a time to pause and take stock of the year gone by—to reflect upon our successes and failures, and then “resolve” to improve ourselves in the year to come. As our Cleantech practice team counts down the final days until the New Year, we’ve attempted to reflect upon the year that was by recounting the Top Five Cleantech Stories of 2011. These five stories (themes, really) are not intended to be a comprehensive list of everything that happened in the Cleantech/Greentech sector in 2011, but are simply our impression of the major events and themes from 2011.

Without further ado, here’s Part I of the list, counting down from 5th to 1st:

Number 5: Venture Capital Continues to Flow into Cleantech as Sector Matures

According to investment statistics contained in the Q3 2011 PricewaterhouseCoopers/National Venture Capital Association MoneyTree report, 2011 is shaping up to be another strong year for venture capital investment in CleanTech. Through the first three quarters of 2011, the Cleantech sector (which crosses several traditional MoneyTree industries and includes alternative energy, pollution and recycling, power supplies and conservation) was the third leading sector for venture capital investment, behind only software and biotech. After surging in 2008, venture capital investment in Cleantech slowed in 2009 and then rebounded to near-2008 levels in 2010. Assuming the 4th quarter of 2011 is generally on par with the first three quarters, this year will see slightly more venture capital flowing to Cleantech than in 2010. Through the first three quarters of 2011, $3.073 billion in venture capital has been directed to Cleantech investments. By comparison, $3.755 billion in venture capital went to Cleantech ventures in all of 2010. Although it appears 2011 will still outpace 2010, Cleantech investments were down 13% from Q2 to Q3 this year, potentially signaling a softening in this sector. This 3rd quarter downturn, combined with the relatively steady level of venture capital investment from 2010 to 2011, has led at least one analyst to call the trend for the Cleantech sector “flat” to slightly down.

Number 4: The (Continued) Emergence of China as a Cleantech Force

China has long been considered an important player in the Cleantech sector, if for no other reason than because China is one of the world’s foremost polluters (along with the United States) and presents a potentially-huge market for cleaner, greener technologies. And of course, China is a major manufacturing center for various industries, including Cleantech. In 2011, China has emerged as more than just a market and manufacturing hub for green technologies; it is also becoming a major source of capital investment in Cleantech, including both private and government-backed investments. According to the Cleantech Group, China-based Cleantech start-ups raised $176 million in Q2 2011 and $138 million in Q3 2011, which was far more than they had raised in previous quarters. From this, a recent article in Forbes notes that at the same time investment firms worldwide are committing more capital to China, Chinese venture capital firms appear to be investing more in Cleantech. One of the primary reasons for this increased private investment appears to be the Chinese government’s pro-Cleantech policies, which include everything from government-backed financing to fast-tracking permits for Cleantech projects. During the next decade, China is predicted to spend between $440 and $660 billion on Cleantech investments – that’s roughly $50 billion per year, or about 12 times the amount of venture capital coming from U.S. firms (discussed above) during the banner year of 2008!

Stay tuned as we “venture” into our Top 3 Cleantech stories of 2011…