Calif. Cleantech VC Deals Increase Gap over Mass.
Mass High Tech
By Kyle Alspach
The Massachusetts clean-technology industry has become less competitive with its larger counterpart in California at getting venture capital deals since 2008, according to a Boston Business Journal review.
Massachusetts has long been a distant second to California in terms of venture capital deals and dollar amounts for cleantech. And while the Bay State’s business and government leaders have no illusions about overtaking their West Coast competitor, they have at least hoped to shrink the gap between the two states.
Yet that gap appears to be widening, at least when it comes to the number of cleantech VC deals, according to figures from the Cleantech Group in California.
In 2008, California saw four times as many cleantech VC deals as Massachusetts (134 to 36), according to the figures. The share going to California grew in 2009 and has expanded further in the first half of this year, when California saw more than five times as many deals as the Bay State (92 to 18).
Observers generally believe the number of VC deals, rather than the dollar amounts, are a more accurate reflection of the health of a state’s cleantech industry, since massive deals tend to skew the data. Still, the dollar figures speak volumes: California has raised more cleantech VC in the first half of this year alone — $2 billion — than Massachusetts has raised since 2005 ($1.8 billion).
Yet both California and Massachusetts have clear leadership roles in the U.S. cleantech industry, ranking consistently in the top three on every state-by-state metric, said Ron Pernick, managing director of California-based research firm Clean Edge Inc., which issued a report on the Massachusetts cleantech industry in April.
In fact, Massachusetts does disproportionately well for its size when it comes to cleantech VC deals: Per capita, the Bay State had 16 percent more deals than California between 2007 and 2009, according to Pernick.
Areas where Massachusetts is most competitive, according to the Clean Edge report, are energy efficiency, solar and energy storage.