Investors put $3B into clean-tech in 2007

Venture capitalists invested a record $3 billion in 221 "clean technology" deals worldwide in 2007, a 43 percent increase over the $2.1 billion invested in 173 similar deals in 2006, a report released Friday by Dow Jones VentureSource shows,

The United States is the clear driving force behind the sector's rapid rise, accounting for 83 percent of global clean technology investment in 2007, according to the report. In fact, the U.S. saw $2.52 billion invested in 159 clean-tech deals, a 79 percent increase in investment over 2006.

The largest U.S. clean-tech deal of 2007 belonged to Palo Alto, Calif.-based Project Better Place, which raised $200 million in its first round of funding to develop a market-based transportation infrastructure for electric vehicles.

Clean-tech accounted for more than 8 percent of total U.S. venture capital investment in 2007 and received roughly the same capital outlay as the entire business/consumer/retail industry. The sector has been targeted by many U.S. regions, including the Albany, N.Y., region, as a potential core industry for future economic development and growth.

"Clean technology is no longer wishful thinking. With record-high fuel prices, ongoing debate over carbon emissions, and the potential for favorable legislation following this fall's election, investors recognize that the time is ripe for innovation and investment in this area," said Jessica Canning, Director of Global Research for Dow Jones VentureSource. "The energy industry is so massive that any slice of it can produce substantial returns to the investor, regardless of if they're targeting the consumer or enterprise. And there's currently no single clean technology leader, so there's significant opportunity to gain from being the first to market. Combine those forces with the attention consumers are giving to products and services that comply with energy efficient standards, and you have a market with huge potential."

In Europe, where Spain, Germany and others have long been on the forefront of clean-tech implementation, clean-tech investment also reached a new record in 2007, with venture capitalists investing about $360 million in 56 deals. This marks a 27 percent increase in capital investment over 2006, despite deal flow being virtually unchanged from the prior year.

China, which saw record clean-tech investment totaling $424 million in 2006, only had six deals completed and $129 million invested in 2007, accounting for just 4 percent of global clean-tech investment. However, China did see four venture-backed clean-tech complete initial public offerings in 2007, generating some $821 million in liquidity.

In the U.S., the median deal size for a clean-tech company stands at $8 million, up from $7.5 million in 2006. By comparison, the median deal size for all industries in the U.S. in 2007 was $7.6 million.