Another Earth Day is upon us. And in celebration of the planet, we've done some checking around to see how well-funded Earth-friendly companies have been in the past few years.
The good news, for the sustainably minded, is that funding dollars for environmental companies surged in 2014 compared to 2013. The bad news is that fewer deals are getting venture capital cash, and in comparison to the really hot technology sector, which pulled in record dollars in 2014, investment is but a tiny green shoot.
And 2015 may be a bit weaker. The year got off to an extremely sluggish start, with just a handful of green deals in the first quarter.
Cleantech is one comprehensive measure for looking at who got funded in this area. It includes agriculture and bioproducts, energy efficiency, smart grid and energy storage, solar energy, transportation, water and waste management, wind and geothermal, and other renewables, according to the National Venture Capital Association.
In 2014, the sector pulled in close to $2 billion in venture capital investment, says NVCA. That represents an increase of 41 percent compared to 2013. But it represents a nearly 30 percent decrease compared to 2012, and a steep slide of more than 50 percent compared to 2011. The number of deals is also down, which means VCs are perhaps finding fewer attractive investment opportunities. There were 146 deals in 2014, a decrease of 14 percent compared to 2013, and a decrease of 53 percent compared to 2011.
By comparison, software companies, a subsector of the fast-growing technology sector, pulled in $21 billion in VC funding 2014, nearly double the amount they received in 2013 and about three times the dollars they took in in 2011.
It's important to realize that it's not only venture capital firms that are funding Cleantech and other sustainable companies, says Andrew Winston, an environmental strategist and founder of Winston Eco-strategies, in Greenwich, Connecticut. Government and corporate spending in the space amounted to an additional $300 billion in 2014, he says.
And given the aggressive goals of both the U.S. and China to cut carbon emissions by 2025, as well as more local environmental issues, such as water shortages in California and Texas, the need for new sustainability technology is only going to increase, Winston says.
"The challenge of mapping venture capital to this technology is how competitive all the technology is, and how long it takes to be paid back," Winston says. For example, he adds, U.S. manufacturers of solar panels compete with the cheaper prices of Chinese companies. Meanwhile, many of the projects, which involve building infrastructure for water or energy, can take years to complete.
Nevertheless, there are standouts. For 2014, here's a look at the biggest venture funding events for sustainable companies, according to Dow Jones VentureSource:
1. Boston-Power Inc., of Westborough, Massachusetts, a provider of lithium ion batteries, pulled in $250 million of late-round funding from undisclosed sources.
2. Sunnova Energy Corp., of Houston, a provider of residential solar systems, got Series A funding worth $250 million from Franklin Square Capital Partners and Triangle Peak Partners.
3. SunRun, Inc., of San Francisco, a solar energy company, pulled in $150 million of late-stage money from Accel Partners, Foundation Capital, Madrone Capital Partners, and Sequoia Capital.
4. Hampton Creek, of San Francisco, which uses plant-based proteins in place of unsustainable ingredients in food products (and an Inc. 30 Under 30 alum), got $90 million from Collaborative Fund, Far East Organization, Founders Fund, Khosla Ventures, and others. It's raised $120 million to date.
5. Impossible Foods Inc., of Redwood City, California, which creates meats and cheeses from plant products, pulled in $75 million of Series A funding from Google Ventures, Khosla Ventures and others.
6. Sungevity Inc., of Oakland, California, a residential solar energy company, got $72.5 million from Brightpath Capital Partners, E.ON Venture Partners, GE Ventures, and others.
7. Solexel Inc. of Milpitas, California, a manufacturer of photovoltaic solar modules, got $65 million from DAG Ventures, GAF Corp., GSV Capital Corp., GSV Ventures, Kleiner Perkins Caufield & Byers, and others.
8. AquaVenture Holdings, of Tampa, a developer of water treatment technology, got $50 million of late-stage capital from Element Partners and T. Rowe Price Group Inc.
9. Verdezyne Inc., of Carlsbad, California, a renewable energy and biofuels company, took in $48 million of funding from British Petroleum, DSM Venturing, Monitor Venture Associates, and others.
10. Phononic Devices Inc., of Durham, North Carolina, a manufacturer of thermoelectric devices that convert heat to electricity, received $44.5 million from Eastwood Capital Corp., Oak Investment Partners, and others.
Six wind and solar companies also have had successful initial public offerings since 2013, according to initial public offering research company Renaissance Capital. Terraform Power, a sun and solar concern, pulled in $500 million from its IPO in July of 2014. Next up was Nextra Energy Partners, of Juno Beach, Florida, which got $400 million from its IPO in June of 2014. Nextra focuses on both wind and solar.
Other strong IPOs include Sprouts Farmers Market, the natural and organic food market, which raised $333 million in its 2013 IPO. And Silver Springs Network, which provides smart grid technology, pulled in $80 million, also in a 2013 public offering.