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Clean-tech investment booms to $1.5 billion in second quarter 2010

August 3, 2010 |  9:38 am

There aren’t that many clean-tech deals being made in the U.S., but the ones that are making it through just came off a mighty fine quarter.

Electric car manufacturers and support companies especially. The big winner of the quarter was Palo Alto EV infrastructure firm Better Place, which landed $350 million in funding.Better place

The Golden State also dominated, according to analysis of data from Dow Jones VentureSource.

“This might as well be a California report,” said Mark Sogomian, a partner and Los Angeles clean-tech leader at Ernst & Young. “Almost all of the companies are California-based. This just highlights how much activity there is in the state.”

Venture capital investment in clean-tech companies for the second quarter hit $1.5 billion -- a 63.8% increase from the same quarter in 2009 and the highest amount since the third quarter of 2008, according to Ernst & Young.

All that funding was spread among just 68 financing rounds, up three deals from the second quarter of 2009. The top 10 deals alone drew two-thirds of the capital.

Besides the electric vehicle sector, which is poised to release a slew of models later this year and next year, the solar and biofuels industries also scored major investments.

Solar companies ended the quarter with 182.6% more funding than in the same period in 2009. Of that $438.8 million pot, Brightsource Energy Inc. of Oakland tucked away $180 million.

And with $265.7 million, biofuel firms saw a 517.2% boom compared to last year.

Research firm CB Insights saw many of the same trends in a similar report from mid-July. California took the lion’s share of the clean-tech investment, nabbing 47% of the deals and 62% of the capital, trailed far behind by Massachusetts and then Texas.

Small businesses in 34 states will get $188 million to develop technologies for fields such as smart grids, energy-efficient buildings, advanced renewables and more, U.S. Energy Secretary Steven Chu said Monday

The 201 awards from the Department of Energy will help develop prototype or pilot operations.

But the clean-tech sector still has plenty of barriers to attracting funding, according to a report last week from international law firm Norton Rose. Although investors see the U.S. as being the most likely beneficiary of private equity investment, it’s regions such as Europe, and specifically Germany, that have the best incentives.

Most of the 446 respondents said that banks are still cautious about lending and debt is still tightly controlled. Nearly half of investors said they view clean-tech deals with more caution than any other investment; more than 30% said the absence of clear regulations keeps many investors from exploring clean-tech options.

--  Tiffany Hsu

Photo: Better Place electric vehicle charge spots. Credit: Better Place

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