“Greentech VC investors remain optimistic on this sector and still have faith in the VC model.  Investors continue to fund early stage deals as well as later stage deals,” says Eric  Wesoff, Senior Analyst at Greentech Media.

“VCs are now digging deep in the greentech sector and looking outside traditional technologies at previously underinvested areas like energy storage, energy efficiency, recycling, water, cleaner coal and green IT,” he adds.

Solar technology once again led the VC charge this quarter with more than US$1.3bn invested in 29 venture capital rounds.

Other renewable energy sectors, such as wind, smart grid and energy storage continue to receive record amounts of funding. Venture firms invested heavily in biofuels such as cellulosic ethanol and algae with more than US$350 million directed towards these new feedstocks and technologies.

Full year 2008

"VC investment in green energy technologies in 2008 exceeded US$7.7bn in more than 350 deals – more than double last year’s dollar totals. We anticipate a slowing in the dollar amount but look for an increase in number of deals as investors back off from building solar and biofuel factories and look for more capital-efficient technologies and firms,” Wesoff adds.

Q4 VC investment by sector: