Cleantech financing during the first quarter of 2012 were “extremely weak” according to an analysis from WCTA Gold Member Cascadia Capital. Globally, funding was down 19% from the prior quarter and 31% below the first quarter of 2011. That is the dark cloud. The silver lining, however, was in early stage financing and in M&A activity (mergers and acquisitions).
In the first quarter of 2012, 44% of fundings were early stage deals. Cascadia says that is good news for two reasons:
- Investors are becoming more comfortable with the risks inherent in cleantech deals and
- Entrepreneurs are creating companies with business models that investors find attractive.
Additionally, M&A activity picked up “significantly” in the first quarter. The $15.1 billion in activity was a sharp rise and the highest quarterly volume since the first quarter of 2011. This “should eventually instill confidence in investors.” Cascadia expects the M&A market “to be robust for the forseeable future.”
M&A activity is strongest in two areas. First, companies that “provide balance of systems products and service companies that have reached scale” have become attractive to buyers. Second, the oil and gas sectors has strong interest.
Source: Cascadia Capital, Financing the Future – The New Energy Equation, June 2012.