Venture capitalists are pouring money into clean technology even as investors scale back funding in many other areas.
Firms in the green sector raised almost $1.2 billion in the third quarter — up 73% from $684 million collected in the same period last year, according to a report released Wednesday by Ernst & Young.
The number of deals in the quarter grew to 76 from 56, according to the report, based on data from Dow Jones VentureSource.
"Confidence in clean-tech investing continues despite the challenging investment market," said Jay Spencer, a director at Ernst & Young.
It was the first time the sector had an increase in funding since the third quarter of 2008.
California pulled in an overwhelming majority of the deals and dollars.
The state led the pack with 32 deals; Massachusetts was a distant second with nine. California's clean-tech companies received more than half of all the money raised in the quarter, $583 million, up 74% from the same period last year.
Most of that money is going to companies in Northern California. But Southern California is home to some new projects, including Los Angeles Cleantech Incubator, said Mark Sogomian, a partner at Ernst & Young.
The incubator company is "setting the groundwork for early-stage companies to grow and thrive here in Los Angeles," Sogomian said, "and hopefully garner venture capital investment down the road."
The growth in clean-tech investing goes against an overall drop in venture capital investments.
Last month, the National Venture Capital Assn. reported that third-quarter venture funding for all companies dropped to $1.7 billion, the lowest in eight years. It was $3.5 billion a year earlier.