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Posts Tagged ‘green tech investing’

photo: Todd Woody

I wrote this story for Grist, where it first appeared.

The anemic economic recovery may have hit the dog days of summer with consumer spending and factory orders slowing, but the new energy economy continues to surge, according to a report released Tuesday by Ernst & Young.

Venture capital (VC) investment in renewable energy, electric cars, energy efficiency, and other green technology jumped to $1.5 billion in the United States in the second quarter of 2010, a nearly 64 percent spike over the second quarter of last year. Green tech investment now has returned to the record levels of the third quarter of 2008, before the global economic collapse shut down the VC’s ATM.

So where’s the money going? Between March and June, at least, investors hitched a ride with startups developing electric cars and the infrastructure to support them. Better Place, the Palo Alto company building electric vehicle charging networks around the world, snagged $350 million. Fisker Automotive, a Southern California startup building a sexy and pricy plug-in hybrid sports sedan called the Karma, scored $35 million, according to the report.

Solar remains a hot opportunity for venture capitalists, with nearly $439 million invested in the second quarter, a 183 percent increase from the year-ago quarter.

It’s no coincidence that the beneficiaries of investors’ largesse are also those startups that received federal loan guarantees to build big solar power plants. (Raising additional capital usually is a requirement for obtaining such federal loan guarantees.)

BrightSource Energy, for instance, secured a $1.37 billion loan guarantee from the U.S. Department of Energy to build its first solar power plant, now undergoing licensing in California. It then quickly raised $180 million from investors.

VCs also continue to pour cash — nearly $200 million in the second quarter — into energy efficiency startups, which tend to be far less capital-intensive than renewable energy companies.

So it’s a good time to go pitch that great green tech idea you’ve been kicking around, right?

Not necessarily. Ernst & Young notes that nearly 59 percent of investment in the second quarter went to so-called later-stage startups that are well on their way to rolling out products.

In other words, venture capitalists seem to be more interested in priming the pipeline for initial public offerings or acquisitions that will produce a big pay day than in financing what green tech investor Vinod Khosla calls “science experiments.”

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ausra-kimberlina

photo: Ausra

In Wednesday’s Los Angeles Times, I write about green tech guru Vinod Khosla’s new $1.1 billion venture funds — the biggest first-time fund since the halcyon days of the dot-com era a decade ago and and a strong signal that investors see a bright future in clean and green technologies. CalPERS, the United States’ biggest pension fund, is the major backer of the new Khosla Ventures’ funds:

In a sign that green technology investing is bouncing back, Silicon Valley venture capital firm Khosla Ventures said Tuesday that it had raised $1.1 billion to spur development of renewable energy and other clean technologies.

It is the biggest first-time fund in a decade and comes as venture capital investment in green technology is just beginning to recover from a precipitous fall prompted by the global economic collapse last fall.

In the first half of the year, investments in green tech plunged to $513 million from $2 billion in the first six months of 2008, according to a survey by PricewaterhouseCoopers.

But Vinod Khosla, founder of Khosla Ventures in Menlo Park, Calif., and a leading green tech guru, has managed to raise an $800-million fund to invest in early and mid-stage clean energy and information technology companies as well as a $275-million fund to finance what he called high-risk “science experiments” that may exist only in a university laboratory.

You can read the rest of the story here.

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