Fresh Report Confirms Soaring Clean Tech Investment

Ernst & Young yesterday became the latest consultancy to confirm that venture capital (VC) investment in clean tech companies bounced back towards record levels during the second quarter of the year, reporting that US investment soared 64 per cent year-on-year to $1.5bn (£940m).

The report echoes similar figures from analyst firms Cleantech Group and VB/Research, both of which detailed how global levels of clean tech venture capital investment returned to pre-recession levels during the first half of the year.

The Ernst & Young analysis, which is based on data from Dow Jones VentureSource, concluded that US clean tech venture capital funding during the second quarter reached its highest level since the third quarter of 2008.

Late-stage venture financing rounds dominated the market, accounting for almost 60 per cent of all VC funding with automotive, solar and biofuel firms to the fore. Overall the top 10 deals amounted to $993m, representing about two thirds of all the money invested during the quarter and providing further evidence that clean tech venture capitalists are increasingly backing established firms that are looking to expand.

"This quarter's investment was dominated by later stage deals as investors provided follow-on financing," said Jay Spencer, Ernst & Young's Americas clean tech director. "Important factors included the need to bridge to strategic transactions as exit opportunities for VC-backed companies and the need to support clean tech companies as they move another step toward commercial deployment."

Green car firms continued to dominate the VC space with electric car recharging specialist Better Place completing a £350m funding round, electric car manufacturer Fisker Automotive raising $35m and diesel engine firm Eco Motors pulling in $23.5m.

The solar energy sector also enjoyed a strong quarter with five of the top 10 VC deals focusing on solar firms.

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