BRIGHTON – Venture investment in North American and European cleantech companies for the first three quarters jumped 28 percent from a year ago, a whopping $3.6 billion, cites a research report from Cleantech Group.

Cleantech estimates that venture investments in China, another hotbed of cleantech innovation, will reach $580 million for all of 2007, up 38 percent from the year before.

As environmental concerns grow worldwide, investors have been steadily investing in the sector for the past decade, said Ron Pernick, author of The Cleantech Revolution. He estimates that less than 1 percent of total venture capital investment went to cleantech in 1999; this year, investment could exceed 10 percent.

Like their biotech brotheren, young cleantech companies need scale, requiring investors to plow huge sums in startups. Recycled Energy Development of Westmont, Ill., raised an eye-popping $500 million this year–the biggest investment so far in 2007, according to Cleantech Group. Others such as Brazilian Renewable Energy, Spain’s Isofoton and Palo Alto, Calif.-based Project Better Place raised about $200 million apiece.

Industry experts say cleantech investment amounts typically far exceed those for software or Web 2.0 companies because cleantech companies are more labor and capital intensive. These companies often need to build factories and buy expensive industrial equipment to produce environment-friendly electricity, gasoline and other types of power.

Software and Web 2.0 companies, by contrast, can be bootstrapped with more modest funds and less overhead. The main investment is a computer.

“The financial instruments for the high-tech market cycle don’t work as well in cleantech,” says Cleantech Group Managing Partner John Balbach. “The typical venture pattern in hightech was that you put $25 million to $30 million tops in a company. In cleantech, Series A [funding] might be $5 million; Series B might be $50 million.” And it’s not uncommon for cleantech companies to raise several more rounds of funding.

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