U.S. Green Tech Investment Declines in Third Quarter
North American green tech investment dropped 42% while China investment increased 5x
Is the world-wide green tech investment growing or declining? A preliminary report issued this month by a San Francisco consulting firm, the Cleantech Group, shows that global venture capital green tech investment dropped 30% in the third quarter of 2010 and investment in North American green tech dropped 42%.
The report measure green tech investment in North America, China, India, Israel and Europe. The $1.53 billion third quarter investment in green technology companies was also 11% less than the same quarter in 2009, when recession-related slowdowns occurred.
The conspicuous drop in the numbers forms a contrast to the first half of 2010, when green tech investment soared, outstripping 2008 records set during the cleantech boom.
Sheeraz Haji, president of the Cleantech Group, stated at the beginning of this month, “Much like we see globally, I think businesses and investors are grappling a little bit with a recovery that hasn’t yet taken off, and I think people are trying to figure out how quickly will the growth occur. I think we’re seeing a little bit of the same in clean tech.”
Most of the sharp decline in green tech investment came from the state of California, which showed a steep decline of 61% in investment dollars. Some analysts have wondered if uncertainty over AB 32, and Proposition 23, which would suspend the global warming law until unemployment is lowered to 5.5% for four consecutive quarters, is impacting venture green tech investment. However, one quarter’s numbers are not enough information to conclude that this is the case.
Even with the sharp investment decline, California still leads other states in green tech investment, with $452 million in the third quarter, in comparison to Texas, in second place with $126 million. The rest of North America actually experienced a rise in green tech investment, but California’s dramatic drop caused North America to show a dramatic decline of 42%.
Meanwhile Asia’s overall green tech investment jumped to $300 million-plus in quarter three in comparison to $100 million in the second quarter. Much of this green tech investment came from China, who invested $153 million in the third quarter of 2010, a large increase from the $30 million spent in the second quarter.