By CLAIRE CAIN MILLER - OVER the past few years, as venture capitalists poured money into solar companies and green technology start-ups, the mood in Silicon Valley resembled the sunny days of the dot-com boom in the late 1990s.

All that changed this winter. Now, venture capitalists are backing off, leaving some clean-tech entrepreneurs wondering whether the next few years will feel more like the dreary days following the dot-com bust.

During the first quarter of 2009, investment in green technologies by venture capitalists, who drive a disproportionate amount of financing in new technologies, shriveled.

In the first quarter of this year, they invested only $154 million in 33 young companies, a drop of 84 percent from the last quarter of 2008 when, despite the crumbling economy, they invested $971 million in 67 start-ups, according to PricewaterhouseCoopers and the National Venture Capital Association. Investment in the first quarter of 2009 reached the lowest level since 2005, before clean technology became Silicon Valley’s newest new trend.

This reversal has led to a debate about whether market forces see little future for alternative energy and other green technologies on a large scale, or whether the economic downturn is taking its toll on this industry as well.

The debate comes down to this: has the green bubble burst?

“We were in the typical hype cycle - a green-tech investment can do no wrong, therefore incredible dollars were pulled in, even in business models that made no sense,” said Michael L. Goguen, a venture capitalist who focuses on clean-tech investments at Sequoia Capital, in Menlo Park, Calif. “When the credit crunch happened and the economy took a nose dive, the brakes screeched on.”

Mark G. Heesen, president of the National Venture Capital Association, prefers to call the clean-tech investment cycle “an education curve.” Still, he said, “if the industry has gotten one criticism year after year, it’s that we have a lemming mentality, and solar probably represents that in the clean-tech space.”

In recent years investment in solar companies fueled the rapid growth in clean technology. Now, venture capitalists’ wariness of solar companies is driving the drop-off in financing.

According to PricewaterhouseCoopers and the National Venture Capital Association, in the first quarter of 2009, only two solar companies raised money through venture capital - a total of $14 million, just 9 percent of clean-tech investment in the quarter. In the fourth quarter of 2008, 12 solar firms raised a total of $460 million, accounting for half of clean-tech investment.

The biggest venture capital deal of any technology sector in the fourth quarter of 2008 was for Solyndra, a company in Fremont, Calif., that makes photovoltaic rooftop systems. It raised $219 million in its fourth round of financing. CaliSolar, a solar cell manufacturer in Sunnyvale, Calif., raised $52 million in the tenth biggest deal of the quarter. In the first quarter of 2009, though, there were no clean-tech deals in the top 10 of all venture capital investments.

Some investors say it is unlikely that investment in solar companies will return at the same level, even if the economy improves.

“Would I invest in solar today? No, unless it were very, very disruptive and had potential for really changing the landscape,” said Steve Vassallo, a principal at Foundation Capital, a venture firm in Menlo Park, Calif., that is investing a $750 million fund, about a quarter of which is going to clean tech.

Instead, clean-tech investing will be in new areas when it comes back, many venture capitalists said. Already, companies that make batteries and water-treatment equipment are drawing investment. Many investors also intend to focus on more capital-efficient projects.

Though investment in all major technology sectors posted double-digit declines in the first quarter of 2009, clean tech’s descent was the sharpest. How could a sector rising so quickly drop off so precipitously?

“Venture capitalists became conservative in the first quarter, and a clean-tech deal is not a conservative deal,” Mr. Heesen said. “It’s pushing the envelope in technology.” But he said he was confident that investment would return. “One quarter does not make a trend,” he said.

David J. Prend, managing general partner at RockPort Capital in Boston and Menlo Park, Calif., said that the promise of big returns prompted too much “me-too investing,” when venture capitalists put money into start-ups that do the same work as other companies.

“There was probably some stuff that shouldn’t have been funded,” he said. “It’s kind of good for some of that to get washed out.” For clean tech to be a viable industry, investment should not return to recent highs, he said.

Mr. Vassallo blamed the credit crunch for the decline in clean-tech investing. More than half of clean-tech investments have been in alternative energy like solar and biofuels, which typically require building big factories. These projects depend on capital like project finance loans as well as tax equity investments, whereby corporations back green energy projects and reap the tax credits. These have been “frozen or completely disintegrated,” he said.

One of his firm’s investments, SunRun, a home solar service company in San Francisco, raised $105 million in tax equity in October. “It felt like we were the last helicopter out of Saigon,” he said. “It was scary.”

The pullback of venture capitalists is happening just as the Obama administration begins funneling money to clean-tech companies.

That could cause investing to pick up again now - but that’s not necessarily welcome news to all. “I’m afraid it will swing too far to the positive,” said Mr. Goguen of Sequoia Capital. “Slamming on the brakes was a good, healthy thing. It served a Darwinian function. Now we just have to be careful we don’t swing back to the hype side.”

Some are relying on Washington to create an environment in which clean technology can thrive again. Otherwise, badly needed innovation in alternative energy could stall, they say.

“As early stage funding dries up, how is all this innovation in academia and government labs going to reach commercial potential?” asked Noubar Afeyan, chief executive of Flagship Ventures in Cambridge, Mass. “If this persists for several quarters, it certainly is going to set us back in terms of having viable energy solutions at a time when we need them.”

A version of this article appeared in print on April 30, 2009, on page F4 of the New York edition.