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October 08, 2009

Venture Capital Investment in Clean Technology Continues Its Recovery
    by Robert Kropp

Investment in third quarter increases by 10% over second quarter to $1.59 billion, but remains down 42% compared to third quarter of 2008. -- The clean technology investment sector's recovery from the effects of the economic crisis has continued for a second quarter, as venture capital investment in the third quarter of 2009 totaled $1.59 billion, an increase of 10% over such investment in the second quarter. However, clean technology venture capital investment was down 42% for the quarter compared to the third quarter of 2008, according to data compiled by the Cleantech Group, a clean technology investment consulting firm.

Its third quarter performance propelled clean technology to the top of the list of categories for venture capital investment, displacing biotechnology. Information technology ranked third. Clean technology accounted for 27% of venture capital investment in the quarter.

Noting that in 2004, clean technology accounted for only 3% of such investment, Dallas Kachan, managing director of the Cleantech Group, said, "In a world where venture capital investment has retreated back to 1997 levels, the fact cleantech has recovered as dramatically as it has and now represents the largest sector for venture investment is a long way for the category to have come from niche status only eight years ago."

The leading clean technology investment sector in the third quarter was solar, which attracted venture capital investments totaling $451 million, or 28% of the total. While investment in solar improved over the three-year low of $114 million in the second quarter, it still trailed the total of $1.2 billion invested in the third quarter of 2008. Solyndra, a California-based manufacturer of photovoltaic systems, attracted $198 million.

The transportation sector followed, with venture capital investment totaling $383 million. Tesla Motors, a California-based electric car manufacturer, raised $82.5 million. Third among industry sectors was green building, which attracted $110 million. Serious Materials, a California-based manufacturer of energy-efficient building materials, raised $60 million.

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