There weren't many clean-tech companies landing investments in the U.S. but the ones that did — especially electric car manufacturers and support companies — just had a gangbusters quarter.
With several electric vehicle models poised to hit the market this year and next, companies that set up the charging network to serve them were strong performers in the second quarter, Ernst & Young said Tuesday. Palo Alto-based Better Place was the big winner, securing $350 million in funding.
The Golden State dominated, according to an analysis of data from Dow Jones VentureSource.
"This might as well be a California report," said Mark Sogomian, a partner and Los Angeles clean-tech leader at Ernst & Young. "Almost all of the companies are California-based. This just highlights how much activity there is in the state."
Venture capital investment in U.S. clean-tech companies hit $1.5 billion in the second quarter — including a whopping $1.1 billion for California firms. The U.S. total was an increase of nearly 64% from the same quarter in 2009 and the highest amount since the third quarter of 2008, according to Ernst & Young.
The funding was spread among just 68 deals, up three from last year's second quarter. The top 10 deals alone drew two-thirds of the capital.
The solar and biofuels industries also scored major investments.
Solar companies ended the quarter with nearly three times the funding of the same period in 2009. Of that $438.8 million pot, Brightsource Energy Inc. of Oakland received $180 million.
And with $265.7 million, biofuel firms saw an influx of capital six times the size of last year's total for the second quarter.
Research firm CB Insights reported many of the same trends in a similar study from mid-July. California took the lion's share of the clean-tech investment, nabbing 47% of the deals and 62% of the capital, trailed by Massachusetts and Texas.
But the clean-tech sector still has plenty of barriers to attracting funding, according to a report last week from international law firm Norton Rose. Although investors see the U.S. as being the most likely to end up with private equity funding, it's regions such as Europe, and specifically Germany, that have the best incentives to encourage investment, the report said.
Most of the 446 respondents to Norton Rose's survey of investors, clean-tech companies and specialists. said banks were still cautious about lending and that debt was still tightly controlled. Nearly half of investors said they were more cautious when it came to clean-tech deals compared with other investments, and more than 30% said that jumbled government regulations prevent many investors from exploring clean-tech options.
On Monday, U.S. Energy Secretary Steven Chu said that small businesses in 34 states would get $188 million to develop technologies for fields such as smart grids, energy-efficient buildings, advanced renewables and more. The 201 awards from the Department of Energy will help companies develop prototypes or pilot projects.