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by Matthew Rock & Real Deals - Friday, 29th February 2008

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Venture capital firms invested a record $3bn (2bn) in clean technology deals during 2007 – an increase of 43 per cent on the previous year. A total of 221 deals were closed in the sector, according to data from Dow Jones VentureSource.

Despite Europe’s early lead in the sector, by 2007 the US accounted for the most of the total investment, with $2.52bn invested in 159 deals. Europe is now considerably behind the US, accounting for just 12 per cent of global investment.

However, the continent also experienced a record year in terms of volume of clean technology investment last year, with around $360m invested in 56 venture capital deals. The largest European funding round in this sector was the $67m investment in Norwegian electric car manufacturer Think Global.

Scott Payton, founder of UK cleantech website, The Clean Scene, says that the the UK's clean tech strengths are:

• A strong academic research base, from which a number the country's leading clean tech business have been spun out. One good example is Ceres Power, a world-leading fuel cell company, which started life as a research initiative in Imperial College.
• Some of the best conditions for wind and marine power in the world. The UK has the most reliable winds in Europe, and some of the globe's best locations for wave and tidal power. The world's largest wave power testing ground, the Wave Hub, is currently in development off the Cornish coast.
• World-beating offshore engineering expertise - built up in the North Sea oil and gas industry. This expertise is crucial for the construction of offshore wind and marine power projects.
• The largest clean tech investor base in Europe (and the region's largest and most experienced community of brokers, lawyers, etc specialising in the sector).
• The most popular market for clean-tech businesses – AIM.

Yet, says Payton, "the UK government's record in supporting clean-tech is patchy. The UK lost its early lead in wind power in recent years, because better subsidies were provided elsewhere in Europe.

"But the government has recently announced ambitious plans to boost wind power generation to meet the electricity needs of every home in the country by 2020. This is guaranteed, in my view, to fall down due to planning permission problems. No-one wants a wind farm next-door to their house. Loads of wind farms are already clogged up in the planning-permission pipeline.

"Regarding the news that US VC investment into clean-tech dwarfs that of Europe. On one level, there is simply vastly more VC money in general in the US than in Europe. A lot of UK clean tech entrepreneurs I've talked to say the innovation is great in Europe, but the best pools of capital are on the other side of the pond."

Click here for more articles about the UK's environmental entrepreneurs and your carbon footprint.

Tags: uk government, environmental entrepreneurs, clean technology, venture capital, clean technology investment, environmental entrepreneur, scott payton, environment, clean scene, wind power, cleantech,