Cleantech investing drops by a third and embraces efficiency

Cleantech venture investments dropped by a third in the second quarter of this year compared to the same quarter last year, according to the latest figures from the Cleantech Group released Wednesday. However, energy efficiency technologies such as LED lighting and energy management software are still getting some love from private investors.

VCs pumped $1.83 billion into 161 deals in North America, Europe, China and India during the second quarter of this year, down 33 percent from the $2.75 billion in the second quarter in 2010 and 10 percent below the $2.03 billion that private cleantech companies raked in during the first quarter of this year.

While solar was the biggest draw in 2010, energy efficiency technologies have been steadily attracting more money and deals in 2011. The energy efficiency sector took in $428 million (38 deals) during the second quarter of this year, followed by solar with $363 million and 27 deals, biofuel and biomaterials with $237 million and 12 deals, and transportation with $176 million and nine deals.

Energy efficiency is a broad term that covers several industries, including hardware and software that monitor and conserve energy use in homes and businesses, efficient light fixtures and air conditioning and heating systems, building materials made with low-carbon processes, and anything else that makes data centers more energy-efficient.

The growing amount of venture capital in energy efficiency tech reflects a change in investment philosophy that has been echoed by many VCs recently: Putting money in energy software and IT could generate more predictable returns in a shorter time frame, compared to some of the capital-intensive investments in solar and biofuels.

Some of the top deals of the second quarter included $80 million raised by LED lighting developer Bridgelux in California, $94.4 million by solar cell maker Suniva in Georgia, $60 million by biofuel developer Enerkem in Canada, and $100 million by electric car startup Fisker Automotive.

Although biofuel didn’t receive as much backing from investors over the past year, it’s one sector that has been more active in using initial public offerings to raise money. California-based Solazyme (s szym) grossed $227.2 million from its IPO. KiOR (s kior), in Texas, took in $150 million in gross proceeds (not including options for its underwriters to buy more shares) from its own.

Overall, the second quarter saw 11 cleantech IPOs worth $1.99 billion, which is slightly less than the $2.1 billion in the first quarter. The $800 million IPO by China’s Huaneng Renewable Energy (s hnp), part of a government-owned energy group, was the biggest of the lot. Six of the 11 IPOs took place in China.

In terms of mergers-and-acquisitions, French energy company Total’s $1.37 billion purchase of a 60 percent stake in SunPower was a headline grabber. And so was the $2.3 billion purchase of Landis+Gyr by Toshiba.

The Cleantech Group also listed the most active venture capital firms, based on the number of rounds they participated in, and these top 5 included: Kleiner Perkins (12 rounds), Draper Fisher Jurvetson (6), Harris & Harris Group (5) and Good Energies (4).

Image courtesy of David Beyer via Flickr.