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MHT's Jackie Noblett: VC funds run short in 2009
MHT's Jackie Noblett: Generating power from hot pavement
MHT's Efrain Viscarolasaga: Tech companies may have to wait for stimulus funds
As venture capital investment in cleantech plummeted worldwide last year, Massachusetts firms bucked the trend, thanks to diversity in technology and several high-profile rounds.
Bay State cleantech companies brought in $356 million in 27 VC deals last year, a 21 percent dollar-value increase over 2008, according to a report released last week by research firm The Cleantech Group LLC and business advisory firm Deloitte LLP. In North America, investment value fell to $3.5 billion — 42 percent less than 2008 and 17 percent less than 2007 — and globally VC cleantech investment fell 34 percent to $5.6 billion.
Yet a look at some of the local startups that closed rounds last year shows investor interest in a range of technologies and company stages, from a $100 million round for Watertown lithium-ion battery maker A123Systems Inc. before its initial public offering in the fall to a $1 million tranche in water-splitting alternative fuels startup Sun Catalytix Corp. Industry watchers say the broad-based approach to cleantech in Greater Boston, compared with other states, helped keep investment relatively stable in a tough funding year.
“It’s not like some other regions that are heavily dependent upon any one technology, so Massachusetts will always be a bit insulated against hard falls in the cleantech venture market,” said Rob Day, a partner at Boston private equity firm Black Coral Capital.
The $1.3 billion invested in solar startups globally in 2009 was roughly a third of investments in 2008 and its share of cleantech investment dollars fell to 21 percent from 40 percent in 2008. Funding for biofuels also fell precipitously to $554 million last year from $904 million in 2008.
Yet Massachusetts did benefit from a 38 percent jump in investment in transportation-related technologies like batteries and fuel cells, making it the second-most popular investment after solar. In addition to the A123 funding, Westborough lithium ion battery-maker Boston-Power Inc. closed a $55 million round in January and Wilmington fuel cell firm Lilliputian Systems Inc. netted $28 million in a round in April.
Some observers also point out the activity of top-tier firms like Polaris Venture Partners, General Catalyst Partners and Flagship Ventures in early stage cleantech ventures as evidence that, despite uncertainty in the VC community, the interest is here to stay.
“Really most every East Coast VC firm now has investment professionals or at least some focus on cleantech. That wasn’t true a couple of years ago or even 18 months ago,” said Stephen Ingram, head of Deloitte’s Tech Venture Center in Waltham. “They’ve seen some successes, and that triggers investors to take more risk.”
Global
2009: $5.6B
2008: $8.5B
Change: -34%
North America
2009: $3.5B
2008: $6B
Change: -42%
California
2009: $2.1B
2008: $3.4M
Change: -38%
Mass.
2009: $356M
2008: $294M
Change: 21%
Texas
2009: $170M
2008: $88M
Change: 93%
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