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August 17, 2006

Local "clean tech" just a sliver of investment pie

Posted by Mark Watanabe at 4:04 PM

From Deputy Business Editor Rami Grunbaum:

With several ambitious biofuels projects under way, and a self-image as both technologically savvy and environmentally sensitive, the Pacific Northwest seems a natural spot for sustainable energy and other eco-friendly projects.

Thus, at the enterpriseSeattle quarterly breakfast this morning, where clean technology was the focus, Rep. Jay Inslee even declared that this region "is destined to become the world leader" in such technology.

But the hard numbers one panelist displayed at the breakfast may have shaken that faith.

Nationally, venture investing in "clean tech" posted its eighth consecutive quarter of growth, hitting $843 million for the second quarter, reported Cleantech Venture Network executive John Balbach. The segment was led by energy, though it is broadly defined to include clean technology involving materials, transportation, air and water quality, and other areas. Year-to-date investments totaled $1.4 billion, almost double the first half of 2005. All told, since 1999, the firm's database counts more than $10.2 billion in VC "clean tech" investments.

But his figures showed the Northwest (Washington, Oregon, Idaho) with the smallest slice of that pie's seven regional slices -- $11 million for 2004 and '05. California and Hawaii, classified as "West Coast," led with nearly half a billion dollars over that same time frame.

NW clean tech boosters need not despair, however. Balbach said those numbers don't reflect two factors: 1. The sector saw an upsurge here in the first half of 2006; using those figures to compare regions, "the numbers would have looked a lot better," he said later. 2. A lot of projects here are not backed by venture capital but by various forms of project finance, meaning either loans or equity capital from non-VC sources such as investment banks.

Indeed, according to the Cleantech Venture network, last quarter saw almost $60 million invested in four deals in the Pacific Northwest; the previous quarter it was less than $20 million spread over three deals. Each of the four quarters before that saw barely any money invested in the sector here, a fall-off from two deals totaling $30 million in Q4 of 2004.

Comparing the latest quarter's regional and national totals shows the three Pacific NW states got 7 percent of the clean tech VC. And, says Balbach, that is nearly all in Washington.

Here are more details on investment in clean technology here and nationally.

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