Venture capital funding in the second quarter jumped to the highest level in almost two years, as investors increased their bets on alternative energy and biotechnology.
Firms invested $6.52 billion in the U.S. during the period, a 53 percent increase from a year earlier and the most since the third quarter of 2008, the National Venture Capital Association and PricewaterhouseCoopers LLC said today in a report. The number of deals rose 29 percent to 906.
Clean-technology financing almost tripled to a record $1.47 billion, led by investments in companies that are promoting electric vehicles and solar power. Startups are attracting hundreds of millions of dollars in venture financing to build plants and make products that customers are waiting to buy, said Suzanne King, a partner at New Enterprise Associates in Chevy Chase, Maryland.
“The nice thing is that it’s not like build it and hope they will come,” King said on a conference call yesterday with reporters. “We’re building to orders that are already in place.”
The appetite for initial public offerings in the industry may be improving after Tesla Motors Inc., maker of the $109,000 electric Roadster, sold shares last month. That was the first IPO for a U.S. clean technology company since September, when electric car-battery manufacturer A123 Systems Inc. went public.
A total of 91 companies filed for IPOs with the Securities and Exchange Commission last quarter, the most since 2007, according to data compiled by Bloomberg. In the April-to-June period, 50 offerings worldwide were shelved, the most in six quarters, as global stock markets tumbled.
Better Place, BrightSource
Clean-technology investment has been spurred partly by President Barack Obama’s administration, which said last year that $80 billion in stimulus spending on renewable-energy initiatives would help create more than 700,000 jobs.
The biggest financing in the quarter was a $350 million investment in Better Place Inc., led by HSBC Holdings Plc, Morgan Stanley and Lazard Ltd. Better Place, based in Palo Alto, California, is building networks of battery-swapping and charging facilities for electric vehicles.
BrightSource Energy Inc., an Oakland, California-based manufacturer of solar panels, raised $150 million from investors including France’s Alstom SA, the California State Teachers Retirement System and VantagePoint Ventures. Miles Electric Vehicles Inc. in Santa Monica, California, received $57 million, and San Francisco-based SunRun Inc., which helps homeowners finance solar power, got $55 million.
The trend is continuing in the third quarter. This week, General Electric Co. and a group of venture firms committed to invest $200 million and initiated a 10-week contest for startups that are helping speed global power-grid upgrades. Trilliant Inc., a developer of so-called smart meters for electric utilities, raised $106 million yesterday from investors including GE, ABB Ltd. and VantagePoint.
“There’s been an avalanche of requests from utilities,” Trilliant Chief Executive Officer Andrew White said in an interview this week. “We’re getting about one a week.”
Biotechnology investing rose 43 percent to $1.3 billion. The biggest deal was a $50 million investment in Pacific Biosciences Inc., a Menlo Park, California-based company that’s competing to build faster, cheaper gene-mapping machines. The money came from Gen-Probe Inc., a maker of tests for sexually transmitted diseases.