Record 2008 for Cleantech with $8.4B in Investments!
While fourth quarter deals were down 4 percent from the same period in 2007 to $1.7 billion in 99 companies, the sector finished the year 38 percent above 2007 totals.
“Investment volume is a hard metric we can assess the state of the industry by, but it’s only one metric,” said Nicholas Parker, executive chairman of the Cleantech Group. “In 2008, there was a quantum leap forward in the talent, resources and institutional appetite for clean technologies. In 2009, we’re going to see a lot of progress in terms of imagining what’s possible, and consensus around the need to really take it up a gear.”
The Cleantech Group has been tracking the sector since 1999 and provides research, financial services and networking events around the world. The group also publishes this Web site.
Solar led the year’s deals with $3.3 billion, or 40 percent of total investments. The year’s top three investments went to thin-film CIGS solar developers Nanosolar ($300 million), Solyndra ($219 million) and SoloPower ($200 million) (see Nanosolar grabs $300 million for utility solar and Solyndra closes 2008 with $220M financing round).
Berlin-based solar thin-film manufacturer Sulfurcell Solartechnik raised $133.7 million in July (see Thin film pulls in a crowd), making Germany the top European country for cleantech investment in 2008. Germany attracted $383 million, up 217 percent from 2007.
Sulfurcell CEO and founder Nikolaus Meyer said he’s glad the company doesn’t plan to raise more equity in 2009, as the funding round is expected build a 75-megawatt production facility and take the company to profitability.
“Now within the financial crisis, it’s much harder to close a fund-raising round of that dimension, especially for companies without a proven track record,” he said. Sulfurcell has been producing modules since the end of 2005 and expects to produce 3 to 5 MW this year.
The economic climate will probably result in price drops and consolidation in the solar market, both of which Meyer said are needed for the industry’s long-term growth.
Other leading sectors in 2008 were biofuels, with 11 percent of investments, followed by transportation with 9.5 percent and wind with 6 percent.
Global venture capital firm Good Energies invests €350 million a year in solar, turbine energy such as wind and hydro, and green building. Corporate secretary and spokesman Alexander Rohde said the financial climate has prompted the firm to shift its strategy for 2009.
“Our focus has changed from funding more deals to helping our portfolio companies through bad times,” he said. That help could come in the form of investments, loans or other support, he said.
Rohde said Good Energies still plans to fund new companies, which is a common sentiment among venture capitalists in the sector. In December, a report from the National Venture Capital Association showed that the cleantech sector could draw more deals but fewer large investments in 2009 (see More deals, fewer dollars for cleantech in ’09?).
Venture capitalists are being squeezed because there are fewer chances to recover their investments in companies, Rohde said. In 2008, clean technology companies raised an estimated $5.1 billion in 16 IPOs, according to the Cleantech Group data.
The five most active venture firms in cleantech in 2008 were Khosla Ventures, Kleiner Perkins Caufield & Byers, the Quercus Trust, RockPort Capital Partners, and Draper Fisher Jurvetson, according to the report.
Some observers expect project financing is where much of the impact will be felt in 2009.
That could create opportunities for companies such as Dublin’s Mainstream Renewable Power, which launched with an investment of €32 million and then raised €40 million in 2008 (see Barclays takes stake in Mainstream Renewable Power). The company helps finance and develop renewable energy projects and could benefit as companies seek alternatives to traditional project financing, said Fintan Whelan, Mainstream’s chief financial officer.
“The biggest challenge is the heightened level of uncertainty,” he said. “The greatest uncertainty is ironically not about equity but about debt. The project finance community has relied on wholesale money markets, which have frozen.”
Mainstream plans to raise equity or debt later this year to fund projects. Whelan said it could be more difficult than in 2008 but is confident that the tight credit market will push investors to place their money with proven companies.
“The past couple years in cleantech, people were drawn in like there was a gold rush. Banks were lending money to people to build projects that shouldn’t get built, and that’s not going to happen next year,” he said. “That’s the type of influence these market pressures exert.”
The report showed that U.S. companies received $5.8 billion in 2008, accounting for 68 percent of the total.
Canada’s cleantech sector pulled in $159 million, down 58 percent from 2007, while European and Israeli companies pulled in $1.8 billion, or 21 percent of the global total.
Chinese companies raised $430 million, for 5 percent of investments. Indian companies raised $277 million for 3 percent of the global tally.