Cleantech VC investing tanks in Q2

And now for the clear dip that we’ve all been waiting for. According to a report out on Wednesday morning from Dow Jones VentureSource, with analysis by Ernst & Young, cleantech venture capital investing dropped 44 percent to $1.1 billion, compared to the same quarter a year ago. The number of cleantech VC deals were also down by 12 percent to 68 for the quarter.

Similar numbers were reported by the Cleantech Group last month, which found that cleantech VC investing had dropped by a third in the second quarter compared to the same quarter last year.

The second quarter fall follows some mixed signals for cleantech VC investing from the first quarter of the year, but also some solid signs that cleantech investors have been pulling back on new investments. While the first quarter of the year produced an almost record amount of cleantech VC funding according to numbers from the Cleantech group, a deeper dive into those numbers revealed that the bulk of those fundings were follow-on rounds for capital-intensive companies like Miasole, BrightSource, Fisker Automotive, and Bloom Energy. However, Dow Jones VentureSource reported first quarter numbers more conservatively than the Cleantech Group, at actually 8 percent lower than today’s second-quarter numbers.

But now after the second quarter, the underlying trend is showing through plain and clear: A good portion of the generalist VCs that invested in a few cleantech companies a few years ago have changed course. Earlier this year, Mass High Tech published a report that studied 10 venture firms that made five or more new cleantech deals between 2003 and 2008, then completely pulled back from new cleantech investments after 2008. Ernst & Young found that in this latest second-quarter report, later stage companies were responsible for $865.2 million, or 79 percent of the quarter’s funding.

Other investors with aggressive large cleantech portfolios, like Kleiner Perkins and Khosla Ventures, are less easily scared off by longer return times, capital-intensive companies and hardcore science innovations. And these funds will also have to continue to support the maturing cleantech companies that need to scale up (i.e., the ones that generated that pseudo record in Q1).

In Wednesday’s report, Ernst & Young found that once again, solar companies continue to draw some of the greatest support, with $234.2 million, or 21 percent of the total funding.

Image courtesy of tonydude919.