Cleantech: Say Goodbye To Risk Capital

The cleantech investor is becoming a more conservative investor.

This is the conclusion to draw from the quarterly cleantech investment figures the Cleantech Group released Tuesday. Quarterly investment totals from around the globe rose 13% from last year to $2.57 billion. But deals came to 159, probably the lowest quarterly level since mid-2009.

In other words, 104 of the quarterly deals, or 65%, were follow-on rounds. That meant 93% of the dollars placed, $2.39 billion, went to existing companies, not to new ideas.

“There have been a rash of large, later-stage deals which have propelled (the first quarter of 2011) to the second highest quarter ever for cleantech VC investment” said Sheeraz Haji, Cleantech Group chief executive.

So what’s the explanation? It is not hard to figure out. Cleantech investors have scattered billions of dollars to solar, electric car and smart grid companies over the past five years. But they have yet to see any substantial returns.

With the likelihood of an improving IPO market for cleantech companies this year and next, firms want to lock in profits before spreading more seed money to early stage opportunities.

To illustrate this point, here are some of the quarter’s biggest deals:

*BrightSource Energy, a developer of solar thermal power plants, raised $201 million from VantagePoint Venture Partners, Alstom, Draper Fisher Jurvetson, Chevron and BP Technology Ventures.

*Miasole, the thin-film solar panel maker, closed a $106 million round with Kleiner Perkins Caufield & Byers, Firelake Capital and VantagePoint.

*Fisker Automotive, a producer of plug-in hybrid cars, collected $150 million from New Enterprise Associates, Kleiner Perkins, Advanced Equities and A123 Systems.

*Coda Automotive, also an electric car developer, attracted $76 million from Harbinger Capital Partners, Riverstone Holdings, Aeris Capital, Angeleno Group and other investors.

*Plastic Logic, developer of plastic display screens and an eReader, raised $200 million in equity funding from RUSNANO and Oak Investment Partners. (Not sure why this is included in the cleantech financings, but who am I to say?)

The new conservatism appears most evident in North America, where 85% of the quarterly dollars originated.

Unfortunately, for cleantech investors, the first quarter IPO market didn’t deliver. Only nine companies went public, raising $2.1 billion, down from 30 in the fourth quarter.

But hope is not lost. Leading companies in the sector have been maturing rapidly, and attractive IPOs from firms such as BrightSource, SolarCity, Silver Spring Networks and others could appear in the next 12 to 18 months.

Let’s hope so. VCs need to turn their attention to new technologies, not continue to covet the old.