US venture capital in cleantech companies reached $4.9bn last year, 4.5 per cent down on 2010, analysis from Ernst & Young revealed yesterday.

During the fourth quarter alone, a total of 70 funding rounds raised $940.5m of investment, led by the energy and electricity generation sectors. Solar racked up $284.5m, 91 per cent of the $312.9m invested in the two sectors during the quarter. Over the entire year, energy and electricity generation raised $1.5bn across 71 rounds, representing a five per cent decrease on 2010.
Energy storage companies fared rather better in 2011, garnering a 253 per cent increase in investment and a 47 per cent rise in the number of deals made on the previous year to reach $932.6m from 28 deals.

While investment in energy efficiency companies fell 29 per cent to $646.9m in 2011, the sector led both the year and quarter in rounds of financing, with 78 deals and 21 deals respectively.

At $3.4bn, companies generating revenue but yet to be profitable accounted for 69 per cent of dollars invested, up from 50 per cent in 2010.

“Cleantech is still in the early stages of a long-term journey,” said Jay Spencer, Ernst & Young’s Americas cleantech director. “We’ve reached a point where new products and services are ready to be launched, and as these products come to market, we’re seeing renewed interest, innovation and opportunity in cleantech.”

In terms of cleantech IPOs, flotations by biofuels companies Solazyme, Gevo and KiOR helped contribute to a total of $688.3m raised in 2011. Merger and acquisition activity reached 79 deals, with a total disclosed value of $2.8bn, while new-build asset financing reached $23.2bn in 234 deals.

“There’s a strong appetite among cleantech companies to go public and we see tremendous opportunity as this industry continues to mature,” said Spencer. “The growing IPO pipeline shows viable, long-term potential.”