Clean Technology Sector In 2010 VC Boom
Monday, July 26, 2010

Bolstered by a resurgent boom in venture capitalism in 2010, investment in the clean technology sector - comprising alternative energy, pollution and recycling, power supplies and conservation, as recorded in the latest MoneyTree report - saw a 107% increase in dollars over the first quarter to USD1.5bn, marking the largest quarterly investment flow ever reported for the sector.

The MoneyTree™ Report is jointly published by PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters.

The report shows that the number of deals completed in the clean technology sector in the second quarter remained flat at 71 deals compared with 70 deals in the first quarter. The increase in Clean Technology investments was driven by several large individual investments, including seven of the top deals this year, and the fourth largest deal reported by the MoneyTree in the past 15 years.

Biotechnology again received the highest level of funding, rising 59% in dollars and 34% in deal volume in the second quarter with USD1.3bn going into 139 deals. Medical device investing also increased 40% in both dollars and deals over the first quarter with USD755m going into 95 deals in Q2. Seed and early stage deals also increased notably in Q2 from prior quarters in both aforementioned sectors, accounting for a greater percentage of total deals.

Driven by clean tech investing, the Industrial/Energy industry received the next highest level of funding in the quarter with USD1.3bn going into 61 deals. This level of investment represents a 95% increase in dollars but a 13% decrease in deals compared to the first quarter when USD658m went into 70 deals.

Mark Heesen, NVCA President commented on the findings:

"As the exit market begins to show signs of life, venture capitalists are now able to look increasingly at new investments outside their existing portfolio. This dynamic translates into momentum in the seed and early stage sectors where valuations remain reasonable and opportunities are great. Investment in the clean technology and life sciences sectors, which are generally longer term and more capital intensive in nature, are balanced by smaller deals within the information technology sectors creating a diversity of opportunities for success for entrepreneurs, VCs and limited partners alike.”

"Venture capitalists are feeling more positive about the economic outlook for investment, based upon the jump we saw in VC funding this quarter," noted Tracy Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers. "The quarterly investment total surpassed the USD6bn mark for the first time since Q3 2008 and the number of deals was the highest seen since Q4 of 2008. The rise in companies lining up to go public in the Life Sciences space in Q2 was also a likely driver of the strong rebound we saw in investing in this sector during the quarter. And, a USD350m deal, the biggest deal in the second quarter, pushed the Clean Technology sector to its highest total on record.”

“If the markets remain positive, we'll likely continue to see robust investment levels for the remainder of the year, with VC funding in 2010 poised to surpass 2009 levels," she added.

Overall, venture capitalists invested USD6.5bn in 906 deals in the second quarter of 2010. Quarterly investment activity increased 34% in terms of dollars and 22% in number of deals compared to the first quarter of 2010 when USD4.9bn was invested in 740 deals

In the first half of 2010, venture capital (VC) investments totaled USD11.4bn going into 1,646 deals, a 49% increase in dollars and a 23% increase in deals from the first half of 2009 when USD7.7 billion was invested in 1,340 deals.