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(Last updated: 8 Mar 2011)
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US Cleantech Investment Trends
Executive summary
The fourth and final quarter of 2010 was robust for US cleantech companies – in fact almost eight out of every 10 cleantech investments made in the world during the quarter was in a US-based company. This quarter punctuated a strong year for the US cleantech sector as a whole. While overall Venture Capital (VC) & Private Equity (PE) investment in the US decreased by $6 billion from 2009 to 2010, this year was in fact a stronger year for US cleantech companies than it was during the previous year.
Understandably, it sounds contradictory to state that investment in US cleantech companies was stronger and more competitive in 2010 than it was in 2009 when the total VC/PE investment figures decreased by $6 billion - but that is indeed the case. The reason lies in the fact that while 2010 saw a drop in PE investment and a decreased appetite in the wind sector; it also saw more diversified investments and investment sources.
Looking back one year ago, PE represented $9,547 million out of a total $11,885 million (or 81 per cent) of the combined VC/PE cleantech investment in the US in 2009. Fast-forward to 2010, and that amount was just $1,987 million out of a total $5,885 million (34 per cent). Given that PE deals are generally characterised by significantly large investment figures, this lack of PE investment is all the more pronounced.
2010 was, however, a year when VC investment in US companies increased. In 2010, a total of $3,898 million was invested in VC-stage companies, up significantly from $2,338 million in 2009. Additionally, in 2010, there were a total of 319 VC and PE investments for US companies (up from 240 in 2009); and on the PE side itself, there were only two fewer deals in 2010 than there were in 2009.
So how is it that a year in which total VC investment increased, total deals increased, and PE deals remained relatively constant – there was $6 billion less in total capital? Answer: wind. In 2010, investment in wind decreased significantly.
In fact, looking even closer, the $8.8 billion invested in wind in 2009 was propped up primarily by one single deal: a Macquarie Group-led consortium of investors who acquired Puget Energy, a Washington State-based power utility company, for $7.4 billion in a private equity buy-out.
Conversely, 2010 was a year in which nearly every sector aside from wind saw an increase in the number of deals and dollar figures. Additionally, deals and dollars were spread fairly evenly amongst the numerous sectors. As a whole, 56 per cent of global investments in cleantech were for US companies in 2010 – compared to just 43 per cent in 2009; indicating investor confidence in a wide range of US companies and technologies.
Looking forward, 2011 is likely to be another year in which the US leads the way in early-stage cleantech investment. While other countries are also emerging as key players, the US continues to stand as the single largest hub for companies, research organisations, and individuals in the cleantech world, being home to 55 of the Cleantech Group's 'Global Cleantech 100' list. This combined with the fact the current government is committed to supporting cleantech development means it is likely that the US will continue to play a lead role in the discovery and support of numerous breakthroughs in this ever-evolving sector for years to come.
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