Cleantech venture investment at $6.8bn in 2013, led by energy efficiency

Global venture capital investment in clean technology (cleantech) totalled $6.8 billion (£4.1 billion) in 2013, with energy efficiency, transportation and solar the most profitable sectors, according to new data.

While the figure represents a 15% decrease on 2012, when $7.9 billion (£4.8 billion) was invested, an average growth rate of 14.5% across all four quarters of the year suggests 2014 could be a significant one for the industry.

Market intelligence firm Cleantech Group, which conducted the research through its platform called i3, said that there had been 1,007 deals completed in total – a figure that is likely to go up once all have been signed off.

Venture capital investment sees money invested in early-stage, fast-growth companies that cannot access more traditional funding because of their relatively small size, unlisted status and risk profile. Cleantech firms, which provide solutions to environmental, energy and resource scarcity problems, are often very attractive in the space.

Sheeraz Haji, CEO of Cleantech Group, said five of the top 20 best performing stocks on the Russell 3,000 – an index representing around 98% of the investable US equity market – were cleantech firms.

“Despite challenging initial public offering (IPO) and mergers and acquisition (M&A) markets, we observed a number of positive 2013 exits including Climate Corporation, Waze, Silver Spring Networks, ecoATM, and Evogene”, he added.

“Our i3 data indicate that investors continue to shift away from capital intensive deals and move towards distributed generation, resource sharing, agriculture, and the digital oilfield theme.”

Energy efficiency was said to be the most attractive cleantech sector of 2013, with $1.3 billion (£790m) invested by venture capitalists – forming 20% of the total for the year, and an annual increase of 23%.

Close behind was transportation, which secured $1.2 billion (£729m), while solar was third with $719m (£437m) worth of deals. Biofuels and biochemicals, recycling and waste, advanced materials, agriculture and water also brought in nine-figure sums.

Geographically, Europe and Israel’s energy efficiency sector saw its venture investment increase 130% in 2013, with $302m (£183m) invested in the region. Transportation was the most attractive sector in Asia/Pacific, while energy efficiency topped the North American rankings.

Ernst & Young said in August last year that the global clean technology sector was showing signs of recovery, thanks to growing demand in China and the rest of the Asia-Pacific region. Its Cleantech Industry Performance Report said the industry had a combined market capitalisation of $170 billion (£109 billion) – up by 18% from the previous financial year.

Further reading:

Nine UK firms appear on Global Cleantech 100

Global cleantech industry worth $170bn after growing 18% in 12 months

Clean technology investment ‘reenergised’ after Obama climate speech

Facebook and Cleantech Group team up for sustainability competition

Cleantech investment is the solution to market ‘urbanisation and industrialisation’