Given the pace at which the business world moves these days, there is often not enough time for thoughtful reflection. It can be all too easy to get lost in last week’s meetings and next week’s deadlines and to completely miss the forest for the trees. With the amount of information that we all try to consume on a daily basis, it is easy to mistake a headline for a trend, hyperbole for fact.
Luckily, that’s where we come in. Consider us your “Outsourced Reflection”. Every quarter, for the past 7 years, we have published a comprehensive quarterly manifesto – Cleantech Group’s Quarterly Investment Monitor. Frankly, I think that this exercise is more important than ever. As we wrote in opening this edition:
2012 has started on a similar note [to the end of 2011] with a rising number of cleantech companies funded despite a continuing public and media fascination with the sector’s high profile failures. In responding to erroneous press accounts of his own death, noted American author Mark Twain once wrote, “the reports of my death are greatly exaggerated.” The same could be said of cleantech.
If all you read in the last three months was news of solar PV manufacturers shuttering facilities or listened to disillusioned investors longingly eyeing Facebook’s IPO while lamenting the lack of cleantech public offerings, you would have a decidedly dreary picture of the market.
To be sure, we’re realists and there is no shortage of challenges, but the bottom line is that despite endless investor hand-wringing, heated political rhetoric, and even thoughtful industry eulogies, the number of cleantech deals went up last quarter.
Yes, you read that right. The number of funding rounds, 188 of them to be specific, was an increase in activity over 4Q2012 and represented a relatively stable level of dealmaking when compared to the last 24 months. The sky, albeit cloudy, apparently did not fall. Measured by dollar value, investment totals did back down to $1.8 billion – investors are watching their wallets more closely, but they still have them out on the table.
If this type of reflection interests you, and you are a subscriber to our i3 research service, you can read all 86 pages of our thoughts on “the quarter that was” here. For those who are not subscribers (you really should get a demo), I’ll tempt you with some other highlights from our report:
North America’s lead in innovation funding is slipping: This should come as no surprise to anyone who spends time in the sector. North American funding totals were down for the quarter to $1.3 billion and would have declined even more precipitously if it were not for a blockbuster, $420 million raise by GreatPoint Energy in Massachusetts. Even this is misleading however, as the lead investor in this deal, China Wanxiang, is clearly motivated by a desire to bring the company’s projects, plants, and jobs to China. While we count the total in North America, the impact of this investment will be abroad. On a related note, deal counts were up significantly in Europe & Israel as the region’s investors took a long-term view and persevered through difficult macroeconomic conditions.
Early-stage deals trended up: In another rebuke to the sector’s naysayers, the number of early-stage cleantech deals was up, 83 early-stage rounds were completed in the quarter. While it is still far from a cake walk to get a new business in the sector funded, the spigot to support early-stage ideas is not off.
Water finally matched talk with action: Speaking of spigots, the water sector is finally beginning to demonstrate the type of activity that many have been expecting for some time. Over the past 24 months, investors and industry observers have waxed poetic about the emerging opportunity in the water sector. 1Q 2012 saw 18 water deals get financed and saw the sector top the M&A charts in activity and deal volume.
Those are just a couple of nuggets that we uncovered when we took the time to pick our heads up from the day-to-day grind. Would encourage everyone, in their own way, to try to do the same!
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