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3rd Quarter Shows Another Record for Venture Capital Funding of Clean Tech Start-ups

| Wednesday October 1st, 2008 | 0 Comments

Clean tech investment breaks record for 3rd quarter of 2008Amid all the gnashing of teeth, high-drama, suspended presidential campaigns, and general ensuing panic over the economic crisis of late, the San Francisco Chronicle reports today that clean tech startups raised a record $2.6 billion in venture capital in the 3rd quarter.

Of that amount, 42% went to California companies, and two-thirds to firms within the United States.

To date, $6.6 billion has been raised so far this year, more than in all of 2007. Investment increased by 17% over the 2nd quarter of ‘08 and by 37% over the 3rd quarter of ‘07.

While that is great news, clean tech is by no means immune from the Big Bear.

A pace that can’t continue amidst crisis

The report was issued by the Cleantech Group in San Francisco. Brian Fan, senior director of research for Cleantech, said that if Congress doesn’t agree on a bailout plan, “All bets are off”.

“The investors we’ve talked to are all very worried about credit and the availability of capital”, said Fan.

The three clean tech sectors raising the most money last quarter are thin film solar energy technology, smart power grids, and algae for producing fuel. According to analysts like Fan, the reason is because these technologies are advanced enough that investors are willing to take risks on which companies will win.

Technologies that show their promise paying off further down the road, like certain cellulosic biofuels are more likely to suffer from the economic downturn, according to Fan:

“From a technology standpoint, the cellulosic guys are years away from production, and we know that this business is very capital-intensive. Big investors in first-generation ethanols (made from sugar, starch, vegetable oil or animal fat) have been burned by these investments. With the exception of algae, cellulosic ethanol will be affected.”

Renewable energy tax credits hanging in the balance

As of Monday evening, when the House surprised everyone by voting down the bailout plan, it also appeared likely – and unbelievably so – that Congress wouldn’t be able to muster the will to come together to make sure that renewable energy tax credits wouldn’t expire at the end of the year. Though everyone seemed to agree that it was a good thing to do, the credits have been attached to larger bills in the House and Senate, and to which neither side could agree to the other’s overall proposals.

A tad disheartening, to say the least. As Solar City CEO Lyndon Rive put it:

“It’s embarrassing to see it not even extended right now. This is something that could create tens of thousands of jobs. The financial industry has collapsed, the construction industry has collapsed. The housing industry has collapsed. And solar is still growing. This will cause it to collapse … And if political leaders can’t see this, I can’t understand what they’re thinking.”

But as of late this morning, there is still a glimmer of hope that something good will come out of Washington to help support the work the private sector is doing to grow the new energy and clean tech economy. According to a report in the San Francisco Business Times, the Senate has attached a provision to extend renewable energy tax credits to the $700 billion bailout, and hopefully the House will agree to it and get it done.

If allowed to expire, it will reflect one of the most profound failures of Congress to lead the nation into a cleaner, brighter future. And frankly, even if they do manage to pass an extension, the melodramatic, last-minute, brinkmanship exhibited by this Congress is shameful.

 


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