2009 saw a severe drop in the total number of new small businesses funded by venture capital firms. While total small business funding is down, 2010 looks to bring in more investment opportunities for VC firms in a few select areas. One of those sectors is clean technology.

 

The Profile of VC Funding Today

 

According to a report published by MoneyTree from PricewaterhouseCoopers, LLC and the National Venture Capital Association (NVCA), the 3^rd quarter of 2009 saw an increase in venture capital funding driven by the clean technology sector. One of the clean tech deals was the ninth largest venture capital deal since 1995.

 

Not only is clean technology getting more deals, but they are receiving business funding over the long-haul. Mark Heeson, president of the NVCA says that this type of funding is “a gradual and deliberate industry shift towards a longer term venture capital investment strategy.”

 

This tells us that venture capital companies are looking more toward sectors like clean technology, biotechnology and life sciences, where business funding occurs over an extended period, sometimes 10 to 12 years. These companies often have multiple rounds of venture capital financing over that time period, and they have a longer average time to accomplish its exit strategy.

 

This is not to say that shorter-term small business investment opportunities will be overlooked. Heesen goes on to say that the mix of sectors that VC firms invest in will become more balanced between shorter-term IT companies, as well as longer-term bio- and clean technology companies.

 

The Promise of Clean Tech

 

Clean technology includes companies that specialize in alternative and renewable energy sources, pollution and recycling, power supplies, conservation, and green transportation. These types of companies are founded to produce more energy efficient methods of producing and using electricity, as well as create fuels and electricity with fewer carbon footprints.

 

Clean technology is seeing an increase in the number of firms due to a variety of reasons. One is the simple fact that most people are interested in clean fuel technology and methods that help save the planet, thus creating a market for these products. Second, the U.S. government also is encouraging clean technology, with tax incentives and guaranteed loans for clean technology companies.

 

Clean technology is still emerging and is at a young stage. With the help of government backed financial aid and increased business funding from venture capital firms, clean technology may become the most sought-after VC investments.

 

 

 

 

 

 

 

 

Tags: angel investors, business funding, clean tech, find angel investors, find capital, find venture capital, green tech, startup business, startups, vcs, venture capital

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