But according to Ernst and Young, clean tech was the exception, and VC investments in this sector reached a record $4.7 billion, up 68 percent over 2007. This compares with just $234 million in VC clean tech investments in 2002.
The top four segments were electricity/electricity generation ($2.7 billion raised), alternative energy ($703 million raised), energy efficiency ($427 million raised) and energy storage ($320 million raised).
The big winner was Solyndra (http://www.solyndra.com), a company that designs and manufactures photovoltaic systems. It raised $219 million and is reported to have raised roughly $600 million in total venture financing.
2009 will not be as strong. Oil prices are down, which makes alternative energy and clean tech investments less attractive. Credit is tight, and most clean tech companies rely on both debt and equity financing for their projects. And the recession and financial market problems are resulting in VC firms cutting way back on investments.
But there is good news for this industry. The long-run trend toward clean tech and alternative energy is still very strong. And while the economic stimulus package has not been finalized, it is clear there are going to be billions of dollars targeted at clean tech.
For small clean tech firms, 2009 will be a tough year. But those that survive 2009 will likely thrive in the following years.
Steve King is a partner at Emergent Research , where he leads an ongoing research project to identify, analyze, and forecast the global trends and shifts impacting small business. He blogs at www.smallbizlabs.com.