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Cleantech Venture Investment Reaches Record of $2.6 Billion in 3Q08

October 1, 2008

The Cleantech Group(TM), founders of the cleantech investment category and providers of leading global market research and financial services for the cleantech ecosystem, today announced 3Q08 results for cleantech venture investments in North America, Europe, China and India totaling $2.6 billion across 158 companies, an all-time record quarter. The previous record quarter was 2Q08, which saw $2.2 billion in cleantech venture investments.

The 3Q08 total is a 37 percent increase over the same period a year ago, and 17 percent increase over 2Q08. Cleantech venture investments through 3Q08 now total $6.6 billion, exceeding the full-year 2007 total of $6.0 billion.

“Cleantech venture investing has continued to show strong growth despite the unprecedented turmoil in the credit markets during the quarter,” said Michael Goguen, Managing Partner, Sequoia Capital and co-chair of the North American advisory board of the Cleantech Group’s Cleantech Network, the largest global network of cleantech investors and companies. “In the coming quarters, we could foresee large scale cleantech projects having to work harder to get financed. However, the capital efficient, early-stage companies addressing the inefficiencies of existing markets should see continued venture financings.”

Highlights from the quarter include an all-time high for smart grid companies, algae companies, and thin-film solar companies:

— SMART GRID: Smart grid companies raised a record $202 million in 3Q08, led by Gridpoint, which raised $120 million, Trilliant at $40 million, BPL Global at $23 million, and Eka Systems at $18.5 million. By comparison, over the past 10 quarters, smart grid companies raised slightly under $30 million per quarter.

— ALGAE: Following a record 2Q08 which saw $84 million in investments in algae, 3Q08 saw over $95 million in investments. Sapphire Energy raised at least another $50 million while Solazyme raised over $45 million.

— THIN-FILM SOLAR: Thin-film startups raised a staggering $620 million in investments in 3Q08. CIGS (copper-indium-gallium-selenide) startups raised the most capital, including SoloPower at $200 million, OptiSolar at $78 million, and Miasole at $35 million, while German CIS (copper-indium-sulfide) provider Sulfurcell Solartechnik raised $134 million. AVA Solar, a competitor to First Solar in the cadmium telluride space, raised $104 million, while UK-based G24 Innovations raised $30 million for its flexible organic dye thin film technology.

“The impending production of electric vehicles by major manufacturers, which will require utility companies to improve the electrical grid to manage plug-in vehicles, has spurred investment in smart grid companies,” said Brian Fan, Senior Director of Research for the Cleantech Group. Fan added, “We have seen the arms race in thin-film solar reach new heights, and now we are seeing it in the algae sector, as investors funnel ever-increasing amounts of capital to companies that have not yet successfully scaled up commercial production. Investors are doubling down to maximize the probability that their portfolio companies can keep up with competition and become winners in their respective markets.”

EUROPE:

The amount invested in European companies was the highest ever recorded for a single quarter. European companies (including Israel) received $742 million in 46 disclosed financing rounds, or 28 percent of the global total. Sectors in Europe which advanced this quarter include thin-film solar and wind.

NORTH AMERICA:

U.S. companies received a record $1.75 billion in 77 financing rounds, accounting for 67 percent of the global total. California-based companies received approximately 42 percent of cleantech investments, with a record $1.1 billion in 35 investments. Canadian companies received $49 million in six investments.

CHINA and INDIA:

Chinese companies raised $111 million in venture capital across seven rounds, accounting for approximately 4 percent of the global total. The largest single investment was in Feida PV Co., Ltd., which produces solar cells and modules. Investments in solar companies accounted for more than half of the investments made in China.

Indian companies raised $6.3 million in venture investments across two rounds, accounting for approximately 0.2 percent of the total. The only disclosed deal in India this quarter was raised by Attero Recycling, an e-waste management and recycling company.

TOP INVESTORS:

 3Q08 Top Five Most Active Cleantech Venture Funds ---------------------------------------------------------------------- Venture Capital Firm  # of rounds              Companies ---------------------------------------------------------------------- RockPort Capital           6      Deerpath Energy, Eka Systems, Partners                          Enphase Energy, Hycrete, Northern Power Systems, Sustainable Spaces ---------------------------------------------------------------------- Google, Inc.               5      Actacell, AltaRock Energy, Aptera Motors, Makani Power, Potter Drilling ---------------------------------------------------------------------- Advanced Technology        4      AltaRock Energy, Nuventix, Rive Ventures                          Technology, Wakonda Technologies ---------------------------------------------------------------------- Kleiner Perkins            4      AltaRock Energy, Ausra, Fisker Caufield & Byers                  Automotive, Flodesign Wind Turbine Corp. ---------------------------------------------------------------------- Khosla Ventures            4      AltaRock Energy, Ausra, NanoH2O, Neersorb ---------------------------------------------------------------------- Source: Cleantech Group (cleantech.com) 

M&As and IPOs:

Cleantech M&A totaled an estimated 138 transactions in 3Q08, of which totals were disclosed for 56 transactions totaling $17.6 billion. This is an all-time high in cleantech M&A, and is a significant increase from the 43 transactions in 2Q08, of which 23 were disclosed, totaling $4.2 billion. In 3Q08, five transactions hit the $1 billion level, including Iberdrola’s acquisition of Energy East, estimated at $4.6 billion, and International Power Plc’s acquisition of Trinergy Ltd for $2.5 billion.

However, cleantech IPOs decreased to four IPOs, worth $587.1 million, down from six IPOs worth $4.4 billion in the previous quarter. The largest IPO was GT Solar, Inc. on Nasdaq which raised $500 million. The NASDAQ saw two cleantech IPOs, while the Toronto Stock Exchange and AIM each had one.

Key takeaways reviewed in webinar next week

The Cleantech Group will review key findings of its 3Q08 data in a live webinar on October 7, 2008 at 11AM EST / 8AM PST, exclusively for members of the Cleantech Group’s Cleantech Network. Network members may join the live meeting at http://cleantech.acrobat.com/research/ a few minutes before 8AM PST, and will need their email address and Cleantech Network password to log in. Members unsure of their passwords can contact Cleantech Group at +1 810-224-4310 x.7151 or can retrieve their password at http://cleantech.com/memberpassword.cfm

About the Cleantech Group, LLC

The Cleantech Group pioneered the cleantech investment category in 2002. Today, it accelerates the development and market adoption of clean technologies globally through membership in the largest global network of investors and companies representing more than $3 trillion in assets. Member investors, growth companies/vendors, enterprises, service providers, and others receive access to capital, investment deal flow, market leading research and data, insight, sales leads, human capital, and promotional opportunities. The Cleantech Group also produces the premier Cleantech Forum events worldwide. Details at http://www.cleantech.com.




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