Massachusetts Firms Rolling in a Growing Pile of Cleantech Venture Cash

11/29/07

Massachusetts is second only to California when it comes to raking in VC dollars for cleantech—and those dollars are evidently piling up faster than maple leaves in autumn. This according to new data from Thomson Financial and the National Venture Capital Association.

The numbers, released yesterday, show that in the first three quarters of this year, U.S. venture capital firms invested some $2.6 billion during 168 cleantech deals. This is up from the $1.8 billion invested in the whole of 2006, which itself was more than 3 times 2005′s cleantech investment.

In terms of VC dollars raised in the first nine months of 2007, Massachusetts ($292.6 million) was a distant second to California ($726.2 million), but still way ahead of third-place Texas ($149.4 million).

U.S. Cleantech Investments by State (1Q-3Q 2007)

State Deals Investment
($ millions)
Average Investment
($ millions)
California 68 726.2 10.7
Massachusetts 11 292.6 26.6
Texas 8 149.4 18.7
Washington 10 121.3 12.1
New Mexico 4 96.0 24.0
Georgia 4 49.1 12.3
Kentucky 1 37.6 37.6
Colorado 2 32.3 16.1
District of Columbia 1 32.0 32.0
Iowa 3 28.0 9.3
U.S. Total 149 1,692.6 11.4

Source: Thomson Financial/NVCA

As far as technologies go, solar was the big winner, taking a $664.6 million piece of the pie. But the company that raised the most in Q1-Q3 was actually a coal gasification firm, GreatPoint Energy of Cambridge, MA. GreatPoint’s massive $100 million Series C round contributed the lion’s share of the $115 million it raised in that period from the likes of Advanced Technology Ventures (ATV), Draper Fisher Jurvetson, Khosla Ventures, and Kleiner Perkins Caufield & Byers.

With interest in cleantech investing exploding, some observers are sounding a note of caution. In the NVCA/Thomson announcement, for instance, NVCA president Mark Heesen emphasized the risks of playing in such a new space: “Investing in new technologies can be fraught with pitfalls and is not for the inexperienced or the faint of heart… Short-term ‘tourists’ should steer clear.” And Xconomist Bill Aulet has previously devoted some serious Xconomy real estate to his qualms about cleantech (much to the chagrin of many of our readers).

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