This just in from Pritchard Capital Partners: venture capital commitments in cleantech hit a new record in the second quarter. Welcome news, if not surprising, given tight credit markets and how energy and food inflation are sapping the overall economy. Some interesting subtrends: energy/electricy generation is still the largest slice of this $962 million pie, and biofuels slumped by 44% compared with the prior quarter, perhaps mirroring a chill in the corn-ethanol space.
Venture capital investments in US cleantech companies grew by 41% to $961.7 million in Q2 2008, up from $683.5 million in Q1 2008, according to an Ernst & Young report based on data from Dow Jones VentureOne. This is the highest total cleantech investment on record, and comes amidst a quarter in which overall venture capital investment was down by nearly 8%. Year-on-year cleantech investment follows this upward trend, increasing 83% from Q2 2007. Energy/Electricity Generation companies attracted the most investment of any sector this quarter with $494.9 million — 52% of the total. Energy Efficiency companies made up 20% of total investment dollars and continues to be a top cleantech investment segment despite a slight 4% decline to $188.3 million in Q2. The third largest segment this quarter was Alternative Fuels, which comprised 13% of the overall US cleantech market. The segment, made up entirely of biofuels transactions, attracted $129 million of investment, down 44% from the previous quarter. Deal volumes in 2008 were distributed across the stage of investments, which is noteworthy given that the majority of deals in 2007 were seed and first round transactions. Also, while overall cleantech investment rose 41%, the number of deals increased by only one to 41 deals in Q2 2008 compared to the preceding quarter. Later stage deals accounted for 39% of the transactions in Q2 2008.