NEW ENERGY VENTURE INVESTMENT HITS NEW HIGH

Money continues to flow to New Energy.

Part of the reason is no doubt simply because more and more people with money see New Energy as a likely place money will make money. But New Energy investment is expected to make money for a unique and important set of reasons.

Brian Fan, senior director of research, Cleantech Group: "There's a growing awareness of the severity and scope of the problems that cleantech is trying to address…Investors are seeing opportunity in funding technologies and companies that are trying to solve some of these problems versus putting capital into other segments of the market."

With all the troubles currently plaguing financial institutions and the disappointing bursting of a series of high hopes in the easily recalled past, there is one inevitable question: Is this record-setting venture investment in New Energy is another bubble?

Fan: "I don't think we're in a bubble…When you look at all of the estimates on how much capital needs to be deployed to create a clean economy, the numbers are mindboggling. They're in the tens of trillions of dollars."

The next item will come as no surprise to NewEnergyNews readers who have been getting the lowdown all year: The 2 biggest areas of venture investment are next-generation biofuels, especially algae biofuels, and solar power plants.

Venture capital is about to bring algae biofuels to a new level of maturity. Brian Fan: "What we've seen in other sectors is that scale matters…It's very early in the game for algae, but now we're seeing companies move from small scale R&D pilots to larger volume production."

On the other hand, solar power plant technology has all the maturity it needs. All it needs is the funding now going its way. Brian Fan: "The most surprising takeaway for me was that solar thermal has been around for decades now…Now half a billion dollars of capital have gone into what's essentially been decades-old technology, producing commercial power since the early 80s."

From Cleantech Group. (click to enlarge)

Cleantech venture investments were $2 bln in Q2
Nichola Groom, July 8, 2008 (Reuters)
and
Cleantech investments hit a record high
David Ehrlich, July 8, 2008 (Cleantech Group)

WHO
Cleantech Group LLC (venture capital firms, investment banks, other investors); Kleiner Perkins Caulfield & Byers, Foundation Capital, Quercus Trust, Khosla Ventures, Draper Fisher Jurvetson

WHAT
New Energy venture investment was a record-setting $2 billion in the second quarter (Q2) of 2008.

Solar power plants are one of the 2 hottest bets. (click to enlarge)

WHEN
- From Q2 2007 to Q2 2008: New Energy venture investment up 58%
- From Q1 2008 to Q2 2008: New Energy venture investment up 48%

WHERE
- Areas leading increased venture investment activity: (1) solar power plant technology and (2) next-generation biofuel technologies.
- U.S. companies: 74% of the $2 billion
- European companies: 13% of the $2 billion
- Chinese companies: 12% of the $2 billion

WHY
- Previous single quarter high for New Energy venture investment was $1.8 billion in Q3 2007.
- Top New Energy venture investors: Kleiner Perkins Caulfield & Byers, Foundation Capital, Quercus Trust, Khosla Ventures, Draper Fisher Jurvetson.
- Top solar power plant technology money winners ($278 million): BrightSource Energy, SkyFuel, Infinia and Sopogy.
- Top next-generation biofuel technology winners ($280 million, $136 million to cellulosic ethanol and $84 million to algae): Range Fuels, Sapphire Energy, Mascoma, EdeniQ, Amyris Biotechnologies, Greenline Industries, Fulcrum Bioenergy, Gevo, GreenFuel Technologies and Aurora BioFuels.

The other hot bet with venture capitalists. (click to enlarge)

QUOTES
- Cleantech Group: "[R]eflecting strong potential for future growth in the Chinese cleantech sector [was $6.9 billion of venture investments to Chinese companies]…"
- Brian Fan, senior director of research, Cleantech Group: "The actual technology itself may not be the sole important determination in who wins this game. Whoever gets to scale first has a much better chance of becoming a dominant player in the space."