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China CleantechVenture Capital

Investment Report

2006-Q1 2007

Accelerating the next wave of innovation®

Published by the Cleantech Network™ © Copyright 2007

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China Cleantech Venture Capital Investment Report: 2006-Q1 2007

© 2007 Cleantech Network™ / i

ABOUT USCleantech Network™ LLC, a Cleantech Group™ company, is a for-profit membership organization that brings senior decision makers from the investment, corporate, government, entrepreneurial and professional services communities together to exchange ideas, explore business opportunities, forge new partnerships and do deals. The organization’s global network has approximately 10,000 investors, thought leaders, senior policy makers, entrepreneurs and service providers, including 1,300 affiliate members, interested in the full array of cleantech technologies. Since introducing cleantech as a successful investment category in 2002, Cleantech Group™ companies have spawned a new investment class with an annual growth rate exceeding 50 percent, with more than US$4.1 billion in venture capital invested in North America, Europe and China in 2006.

Cleantech China™ LLC is a joint operation between US-based Cleantech Group™, the parent company of Cleantech Network™, and China-based Tsing Capital™, a venture capital management arm of Tsinghua Holdings™. Cleantech China™ uses the Cleantech Network™ model to bring cleantech innovation and capital together throughout China through its membership services, research on investment trends, forums, advisory services and publications.

Tsing Capital™ Ltd. is the most prominent China-based venture capital management firm focusing on cleantech industries. Tsing Capital manages the China Environment Fund, the leading fund for sustainable investment in China today. Affiliated with Tsinghua University, Tsing Capital™ has a management team consisting of professionals with both domestic and international venture capital experience.

ABOUT THE AUTHORSNicholas Parker

Nicholas Parker is co-founder and chairman of the Cleantech Group™ LLC, parent company of the Cleantech Network™ LLC, Cleantech Advisors™ LLC, Cleantech Indices™ LLC, Cleantech Search™ LLC and Cleantech China™ LLC. He has 15 years of experience starting and investing venture funds worldwide through limited partnerships, family offices, corporate funds and endowments. He has served as an advisor to multilateral agencies such as the World Business Council on Sustainable

Development and the International Finance Corporation (World Bank). He earned a BA in Technology Studies (Carleton University, Ottawa) and an MBA (City University, London), and has authored or edited 11 publications related to technology, finance and international business. He serves as chairman of E+Co, a public purpose investment company for clean energy enterprises in developing countries, has interests in property development and is a member of several academic and think tank advisory boards. He is also a fellow of the Royal Society for the Arts, Manufactures and Commerce (RSA).

Jerry Li

Jerry Li is country director of Cleantech China™. He has an extensive management background, including a number of positions with top international organizations in China. He served as country director of New Ventures China, WRI Sustainable Enterprise Program, chief operations officer and principal consultant of Asia Logistics Technologies (China) Ltd, and general manager of FedEx Global Supply Chain Services, China. He holds a BS in Resources Management from Nanjing University and an MS in Human Environment from Beijing Normal University. He is also an international fellow of Leadership for Environment and Development (LEAD International).

Steven Guo

Steven Guo is director of research and analysis at Tsing Capital™ Ltd., where he is responsible for industrial research and knowledge management. Prior to joining Tsing Capital™, he served as managing partner of Raise-Win Consulting. He was also a founding partner of Zihua Consulting Company, a senior research fellow at Tsinghua University School of Management and a project manager of the investment banking business at CITIC Security. He has over eight years of professional experience in corporate strategic planning, human resource management, project assessment and policy consulting. He earned a BE in Environmental Engineering and an MA in Technology Economics from Tsinghua University.

ABOUT US


© 2007 Cleantech Network™ / ii

Candace Stuart

Candace Stuart is director of publications at the Cleantech Group™ LLC and co-author of the European Cleantech Investment Report: 2003-Q2 2006. Before joining the Cleantech Group™, she was editor-in-chief at Small Times, a nanotechnology-focused business magazine that she helped launch in 2001. She developed and oversaw the magazine’s annual state rankings, a state-by-state quantitative analysis, and created its annual university guide. She also worked as an assistant business editor and wire editor at the Detroit News in Michigan, and as director of media relations at the University of Dayton in Ohio. She also taught in the university’s communications department. She received a BA in English from Kenyon College and an MA in journalism from Indiana University.

ACKNOWLEDGEMENTSThis report benefits from the assistance of numerous individuals working and studying in the cleantech area. Full responsibility for the contents of the report rests with the authors. We would like to thank the following people for their contributions to the report:

Anastasia O’Rourke, Yale University

Gary Rieschel, Qiming Venture Partners

Pierre duPont, Two Sigma Investments LLC

Simon Littlewood, London Asia Capital plc

Christoph Loeslein, London Asia Capital plc

Hans Chen, Tsinghua University

Billy Tan, Tsing Capital™ Ltd.

Mannie Liu, Renmin University of China

Kurt Hierholzer, Cleantech Group™ LLC

ABOUT US


© 2007 Cleantech Network™ / iii

TABLE OF CONTENTS

1. About Cleantech Network™, Cleantech China and Tsing Capital™ i

2. About the Authors i

Acknowledgements ii

3. Introduction iv

Foreword iv

Aims and Objectives iv

Executive Summary v

Definitions and Methodology vi

4. Cleantech Investment Analysis 1

4.1 Overall Analysis 1

Key Findings 1

Charts and Graphs 1

Analysis and Future Trends 3

4.2 Segment Analysis 4

Key Findings 4

Charts and Graphs 4


4.3 Geographic Analysis of Deal Sources 6

Key Findings 6

Charts and Graphs 6


4.4 Deal Stage Analysis 8

Key Findings 8

Charts and Graphs 8

4.5 Exits 9

Key Findings 9

Charts and Graphs 9


5. Capital Deployment Opportunities 11

Key Findings 11

Charts and Graphs 11


6. Conclusions 13


© 2007 Cleantech Network™ / iv

FOREWORDChina, the world’s fastest growing economic superpower and increasingly a candidate for the title of the world’s top polluter, provides a promising marketplace for clean technologies. As the world’s largest maker of cement, home electronics, steel and many other industrial and consumer products, the country has been enjoying an annual growth of over 8 percent for seven continuous years, based on its gross domestic product. But the boom has carried a price in the form of serious environmental deterioration and over exploitation of natural resources. Clean technologies are increasingly needed by the whole country to create sustainable development.

In the following pages we provide comprehensive and in-depth information to help those who are interested in the advancement of clean technologies to make informed decisions. The China Cleantech Venture Capital Investment Report: 2006-Q1 2007 is an important part of our global commitment to catalyze and accelerate the growth of cleantech markets. For quarterly updates, consult the Cleantech Investment Monitor™, where Chinese, European, Israeli and North American deals are included in our analysis of cleantech investment. This report as well as the quarterly updates analyze not just energy-related segments but also other critical sectors such as water and wastewater, transportation and agriculture.

AIMS AND OBJECTIVESWe used one year and a quarter of data on cleantech venture investing in China to map out patterns, explain reasons for trends and project short-term future activities. The data covered venture investments placed in China in 2006 and Q1 2007. We also looked at data from 2005 to better understand the investment landscape and to make future projections.

We aim to provide reliable quantitative and qualitative information about cleantech venture investments and exits in China to allow investors, entrepreneurs, policy makers and others to make intelligent and informed decisions.

We believe this is the first comprehensive cleantech analysis on China available and that the thoroughness of our research and analysis combined with our longtime institutional knowledge of the cleantech marketplace make the China Cleantech Venture Capital Investment Report: 2006-Q1 2007 a ground-breaking report.

INTRODUCTION


© 2007 Cleantech Network™ / v

INTRODUCTION

EXECUTIVE SUMMARYCleantech investment in China increased 147percent between 2005 and 2006. In 2006, investors placed US$420 million across 26 cleantech deals compared to US$170 million in 2005. The momentum is expected to continue through 2007. The US$154 million that was invested in Q1 2007 is almost four times the amount invested in 2005.

Cleantech ranked as the third largest categoryfor venture capital investment in China, behind only information technology and communications. Cleantech is on an upward trend, growing from about 8 percent of overall VC investments in 2005 to 19 percent of total venture investment in 2006. Overall venture activity in China was robust, with investors placing US$2.2 billion in deals in 2006.

The percentage of China’s cleantech venture capital to its GDP is 0.016, which stands between North America (0.022 percent) and Europe (0.005 percent). While the markets for cleantech products are relatively new, investors see potential for growth as conventional energy supplies dry up, making renewable energy sources more competitive, and as stringent standards are put in place to counter global warming. Veteran investors see opportunity in cleantech that is akin to IT, which today is the dominant investment segment in China.

Policy drives much of the interest in China’s cleantech industries. The enforcement of China’s Renewable Energy Law attracted a flood of venture capital investment into energy-related fields in 2006. The 11th 5-Year Plan is and will continue to be a stimulus on cleantech investment in the coming years. Some 70 percent of the US$420 million invested in 2006 was devoted to the solar

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energy sector. Energy efficiency, biomass, wind energy and other segments will contribute to cleantech’s dramatic rise in the coming decade. But it should be noted that the segments hold risks for investors as well.

The Chinese cleantech venture capital market in 2006 and Q1 of 2007 covered four segments: Energy Generation, Water & Wastewater, Agriculture and Materials. Energy Generation made up more than 70 percent of overall cleantech investment, a pattern that is similar to European and North American investment. Second to Energy Generation, Water & Wastewater played an important role in cleantech investment in 2006 and Q1 of 2007, with six deals totaling US$90 million. The Water & Wastewater segment shows potential as the next emerging segment in China.

The Yangtze Delta area in East China topped the list for regional breakdowns both for the number of deals and amount of investments across the country. North China followed while the relatively developed South China was far behind. Generally, West and Central China have a long way to go to catch up with the East.

Between 2006 and Q1 2007, eight Chinese cleantech companies went public, among which six were venture-backed. NASDAQ in the US, the AIM in the UK, SGX in Singapore and NYSE in the US were the most popular exchanges for Chinese companies. But only one of eight companies chose NYSE, implying that the Sarbanes-Oxley Act of 2002‘s heightened requirements for listing and its related costs present a barrier for some companies. Nonetheless, Chinese companies still prefer to have initial public offerings in the United States. Trends emerging in 2007 point to more cleantech companies going public with at least four IPOs anticipated by Chinese companies in the solar segment in 2007.

Chinese cleantech markets and venture capital investment will increase dramatically in the future. We expect the total amount of nationwide cleantech venture investment to equal approximately US$600 million in 2007, and surpass US$700 million in 2008. Energy-related companies will maintain their position as the leading investment category, owing to global market demands on new energy and environmental restrictions in China. Energy-related venture capital is expected to climb to US$500 million in 2008. The Water & Wastewater segment will follow as the next booming segment because China is facing serious issues of water quality and water resources, especially in North China. Watertech venture investment is expected to reach US$100 million in 2008.

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© 2007 Cleantech Network™ / vi

DEFINITIONS AND METHODOLOGYCleantech

The term “cleantech” embraces knowledge-based products and services that optimize the use of natural resources while reducing ecological impact and adding economic value through lowered costs or improved profitability. Such technologies range from alternative forms of energy generation to smart materials and water and wastewater treatment. The concept extends beyond environmental technologies that historically dealt more with end-of-the-pipe solutions to regulatory requirements than with front-end products that address market needs. Unlike clean energy, cleantech encompasses but isn’t limited to alternative and renewable energy technologies. It instead looks at the entirety of innovations that create economic gains without ecological losses.

Industry segments

The Cleantech Network™ breaks cleantech investments into 11 segments. The China Cleantech Investment Report 2006-Q1 2007 focuses on the 11 segments only, but segments are further defined into sub-segments and beyond in the Cleantech Network™

databases. Though not all of the 11 cleantech-defined segments emerged in China so far, sub-segments are listed after the segments below to help readers better understand the categorization.

AgricultureNatural pesticides, land management, organic food, aquaculture

Air & EnvironmentCleanup/safety, emission control, monitoring/compliance, trading & offsets

Energy EfficiencyLighting, buildings, glass, others

Energy GenerationWind, solar, hydro/marine, biofuels, geothermal

Energy InfrastructureManagement, transmission

Energy StorageFuel cells, advanced batteries, hybrid systems

Manufacturing/IndustrialAdvanced packaging, monitoring & control, smart production

MaterialsNano, bio, chemical & others

Recycling & WasteRecycling, waste treatment

TransportationVehicles, logistics, structures, fuels

Water & WastewaterWater treatment, water conservation, wastewater treatment

Methodology for data collection and analysis

The Cleantech Network™ tracks the activities of companies and investors involved in innovative technologies that optimize the utilization of natural resources while reducing ecological impact and adding economic value through lowered costs or improved profitability.

Venture activities in China have not been as well tracked as in North America or Europe. We aggregated data on Chinese cleantech venture investments, initial public offerings, and mergers and acquisitions based on several sources. Venture data are collected from Dow Jones Venture Wire, China Venture Capital Research Institute, investor announcements, news wires, press releases, company and government websites, and other institutional presses. Several personal interviews with veteran executives and professionals were undertaken to amend and validate the data collected, greatly helping to improve accuracy.

INTRODUCTION


© 2007 Cleantech Network™ / 1

Fig. 1: Cleantech Investment Deals and Amounts

KEY FINDINGSIn 2006, investors placed US$420 million across 26cleantech deals, an increase of 147 percent compared with US$170 million invested in 2005.

2007 is on track to surpass 2006 for cleantechventure investment. US$154 million was invested in six deals in the first quarter, almost four times the amount invested in Q1 of 2005. (See Figures 1 and 2.)

Cleantech ranked as the third largest categoryfor venture capital investment in China, behind only information technology and communications. Cleantech captured 19 percent of the total venture investment in China n 2006. Overall venture activity was robust, with investors placing US$2.2 billion in deals in 2006.

Investors favored first and second round deals. The stage of investment combined with the technological sophistication required for China’s environmental and energy projects pushed the

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median cleantech deal size above the norm. The median size of cleantech investment was US$13.8 million, more than double the overall industrial median of US$6.24 million. (See Figure 3.)

China’s 2006 total of US$420 million is small, though, when compared to US$2.9 billion of cleantech venture capital invested in North America and US$700 million invested in Europe.

The average cleantech deal size in China in 2006 was US$16.2 million, larger than the average size for Europe (US$5.6 million) but smaller than North America (US$19.9 million). One reason for the larger size deals is that venture capitalists in China tend to invest in more mature Chinese companies rather than fledgling startups. (See Figure 5.)

The top eight cleantech investments totaled US$330 million, with average deal size of US$41 million. Top deals included Jiangsu Shunda Semiconductor, which received US$82 million for its pre-IPO. (See Figure 6.)

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OVERALL ANALYSIS

QuarterNumber of Deals Amount (US$M) Average (US$M) Median Size (US$M)

Q1 2006 2 11.00 5.50 5.50Q2 2006 8 123.70 15.47 12.65Q3 2006 9 205.70 22.86 15.40Q4 2006 7 79.60 11.37 12.65Q1 2007 6 154.00 25.67 22.00

Total 32 574.00

Fig 2: Cleantech Venture Investments by Quarter

Source: Cleantech Network™

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Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007

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Fig. 5: Comparison of Average Size


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OVERALL ANALYSIS

Fig. 3: Average and Median Size of Cleantech Venture Deals by Quarter


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Fig. 4: Cleantech Investment Size: North America, Europe and China


N. America

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ANALYSIS AND FUTURE TRENDSWhile the markets for cleantech products are relatively new, investors see potential for growth as conventional energy supplies dry up, making renewable energy sources more competitive, and as stringent standards are put in place to counter global warming. Veteran investors also see opportunity in cleantech that is akin to IT, which today is the dominant investment segment in China.

Policy drives much of the interest in China’s cleantech industries. The enforcement of China’s Renewable Energy Law attracted a flood of venture capital investment into energy-related fields in 2006. The 11th 5-Year Plan is and will continue to be a stimulus on cleantech investment in the coming years.

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Some 70 percent of the US$420 million invested in2006 was devoted to the solar energy sector. Energy efficiency, biomass, wind energy and other segments will contribute to cleantech’s increasingly dramatic rise in the coming decade. While the segments hold risks, venture capitalists are expected to increase their investments dramatically in the coming decade.

Several investment funds that focused on traditional segments including telecommunications and media technology have switched to the cleantech arena, indicating more and more cleantech funds will emerge in China.

The six cleantech deals in Q1 2007 captured US$154 million, which is 90 percent of the cleantech investment total for 2005. The strong growth shows that investors are enthusiastic about cleantech’s potential in 2007, setting the stage for even more growth in the future.

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OVERALL ANALYSIS


Fig. 6: Top 8 Cleantech Investments in Size

Company Sector Date Investor Stage Region Amount (US$M)

Jiangsu Shunda Energy Generation Feb-07 Goldman Sachs Actis 1st East 82Solar Fun Energy Generation Aug-06 CVC Good Energy 1st East 53Jiangxi LDK Energy Generation Sep-06 CDH, Netexis,

JAFCO,CEF2nd Central 48

Trina Solar Energy Generation Apr-06 Merrill Lynch Milestone

1st East 40

CEEG Nanjing PV Energy Generation May-06 CRCI, CEF 2nd East 28Jiangxi LDK Energy Generation Dec-06 CDH, Netexis,

JAFCO, CEF2nd Central 22

Greensaver Tech Energy Storage Oct-06 SAIF 1st Central 20Shanghai US Water Water & Wastewater Nov-06 Blue Ridge 1st Central 20



SEGMENT ANALYSIS

KEY FINDINGSChina’s cleantech venture capital market in 2006 and Q1 of 2007 was concentrated in four areas: Energy Generation, Water & Wastewater, Agriculture and Materials. (See Figures 7 and 8.)

Energy Generation, whose investments were mainly in solar, made up more than 70 percent of overall cleantech investment in 2006 and Q1 2007. The Energy Generation segment is similarly dominant in Europe and North America as well.

Thirteen of the 17 deals in Energy Generation were in solar for a total of US$403 million. Wind power accounted for two deals and US$22 million while biomass received two deals and US$13.2

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million. Clean Development Mechanism (CDM) projects and crude oil prices enticed venture capitalists to look at opportunities in energy-related markets.

Second to Energy Generation, Water & Wastewater played an important role in cleantech investment in 2006 and Q1 of 2007, with six deals totaling US$90 million. The Water & Wastewater segment shows potential as the next emerging segment in China.

Agriculture and Materials each had three deals totaling US$9.9 million and US$2.9 million, respectively. Each segment accounted for 9 percent of the number of deals. (See Figure 9.)

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Fig. 7: Cleantech Investment Segment

Segment Number of Deals Amount (US$M) Average (US$M)

Energy Storage 2 22.00 11.00Energy Generation 17 438.60 25.80Energy Efficiency 1 11.00 11.00Materials 3 2.90 0.96Agriculture 3 9.90 3.30Water & Wastewater 6 89.70 14.94Total 32 574.10 17.90



ANALYSIS AND FUTURE TRENDSThe Renewable Energy Law accelerated investment in energy-related segments in China, making Energy Generation the fastest developing segment. Energy Efficiency, Water & Wastewater and Materials are likely to be the next emerging segments.

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Most cleantech market segments are less developed in China than in North America and Europe where innovation is more decentralized. China is expected to catch up with the innovation or introduction of pertinent technologies.

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SEGMENT ANALYSIS

Fig. 8: Cleantech Investments by Segment, Amount and Number of Deals


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024681012141618

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Fig. 9: Cleantech Deals by Segment


Energy Generation54%Energy Efficiency

3%

Materials9%

Agriculture9%

Water andWas tewater

19%Energy Storage

6%



KEY FINDINGSThe Yangtze Delta area in East China topped the regional breakdown list both for the number of deals and amount of investments across the country. Thirteen deals worth US$338 million accounted for 41 percent of the number of deals and 58 percent of the total investment for China. (See Figures 11 and 12.)

North China followed with US$53 million invested in eight deals while the relatively developed South China was far behind.

Generally, West and Central China have a long way to go to catch up with the East. (See Figure 10.)

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GEOGRAPHIC ANALYSIS OF DEAL SOURCES


Fig. 10: Geographic Patterns of Cleantech Investment

Region Number of Deals Amount (US$M)

Central 5 107.2East 13 337.8North 8 53.2South 3 9.9Others 3 66.0Total 32 574

Fig. 11: Cleantech Investments by Region


Central China19%

South China2%

Others12%

North China9%

Eas t China58%



ANALYSIS AND FUTURE TRENDSThe cleantech venture capital markets in East and North China are flourishing with the convergence of new energy industries. Companies such as Suntech Power, CEEG Nanjing PV, Solar Fun, Trina Solar, Renesolar and others are all based in the Yangtze Delta area.

East and North China attracted cleantech venture capital investment because of their industrial base, market access, technology development and intellectual resources.

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Favorable Chinese policy encouraging cleantech development in West China along with the strength of the region’s natural resources and labor costs will generate much potential for cleantech venture capital activity in the region.

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GEOGRAPHIC ANALYSIS OF DEAL SOURCES

Fig. 12: Cleantech Deals by Region


East China41%

North China25%

South China9%

Others9%

Central China16%



DEAL STAGE ANALYSIS

KEY FINDINGSInvestments in China can be broken down into three stages: seed stage, first round and second round. In 2006, nineteen first round deals accounted for 59 percent of total number of cleantech deals, while eight second round deals contributed 25 percent of the total number of deals. The five seed-stage investments provided the remaining 16 percent (See Figure 14.).

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Venture capitalists tend to invest in later stage rounds with faster and higher financial returns but lower risks.

Seed-stage deals averaged US$2.4 million; first-round deals averaged US$15.7 million and second-round deals averaged US$32.9 million. (See Figure 13.)

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Fig. 13: Cleantech Investment Stage

Stage Number of Deals Amount (US$M) Average Size (US$M)

Seed Stage 5 12.2 2.4First Round 19 299.1 15.7Second Round 8 262.8 32.9Total 32 574

Fig. 14: Percentage of Cleantech Deals by Stage


Second Round25%

Seed Stage16%

First Round59%


EXITS


Fig. 15: List of IPOs of Chinese Cleantech Companies

Company Time Exchange Segment Code Price Share JA Solar Mar-2006 NASDAQ Energy Generation JASO 15.00 USD 15MSino-Env Apr-2006 SGX Water & Wastewater Y62 0.75 SGD 300MChina Biodiesel Jun-2006 AIM Energy Generation CBI 0.85 GBX 9.41MRenesolar Aug-2006 AIM Energy Generation SOLA 1.50 USD 33.33MEpure Water Oct-2006 SGX Water & Wastewater P75 0.71 SGD 100MCanadian Solar Inc. (CSI) Nov-2006 NASDAQ Energy Generation CSIQ 15.00 USD 7.7MSolar Fun Dec-2006 NASDAQ Energy Generation SOLF 12.50 USD 12MTrina Solar Dec-2006 NYSE Energy Generation TSL 18.50 USD 520M

KEY FINDINGSBetween 2006 and Q1 2007, eight Chinese cleantech companies went public, among which six were venture-backed. (See Figure 15.)

NASDAQ in the US, the AIM in the UK, SGX in Singapore and NYSE in the US were the most

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popular exchanges for Chinese companies. But only one of eight companies chose NYSE, implying that the Sarbanes-Oxley Act of 2002‘s heightened requirements for listing and its related costs present a barrier for some companies. Nonetheless, Chinese companies still prefer to have initial public offerings in the United States. (See Figure 16.)

Fig. 16: Cleantech IPOs by Exchange


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AIM

NASDAQ

NYSE

SGX

Number of IPOs



EXITS

ANALYSIS AND FUTURE TRENDSMost of the energy-related Chinese companies preferred to go public in the United States on either NASDAQ or NYSE. Traditional environmental protection technology companies looked at Singapore and Hong Kong for filing IPOs.

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Six out of eight (75 percent) of the IPOs listed were venture-backed.

Trends emerging in 2007 point to more cleantech companies going public with at least four IPOs anticipated by Chinese companies in solar segment in 2007.

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Fig. 17: Breakdown of Cleantech Segments in IPOs


0 1 2 3 4 5 6Solar PV

WastewaterTreatment

Biofuel

Number of IPOs



CAPITAL DEPLOYMENT OPPORTUNITIES

KEY FINDINGSBased on our research and analysis of 2005, 2006 and Q1 2007, we expect a rapid increase in 2007 followed by a stable, moderate increase in 2008 and onward due to rational calming down of the solar market. As the Chinese venture capital market has been, and is still, policy driven, there is no existing projection model that fits the market well. We looked back to the history of how policies affected all industry development, and

statistically predicted a 40 percent increase in 2007, based on 2006 data. For the 2008 projection, we expected a bit of a contraction in the venture capital market from the central government when Olympic Games become a top priority. About a 25 percent annual increase is expected to occur from 2007 to 2008.

Venture capital investing mainly in Energy Generation, Energy Efficiency, Energy Storage and emerging water technologies will contribute to the increases.

Fig. 18: Cleantech Venture Capital in the Coming 2 Years


0100200300400500600700

2006 2007 2008Year

US$M



CAPITAL DEPLOYMENT OPPORTUNITIES

ANALYSIS AND FUTURE TRENDSAlong with the rapid increase of the global cleantech market, Chinese cleantech venture capital investments also will rise dramatically. We expect the total amount of nationwide cleantech venture investment in 2007 to be approximately US$580 million, and surpass US$720 million in 2008. (See Figure 18.)

Energy-related companies will maintain their position as the leading investment category, owing to global market demands on new energy and environmental restrictions in China. Energy-related venture capital is expected to climb beyond US$500 million in 2008.

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The Water and Wastewater segment will follow as the next booming segment because China is facing serious issues of water quality and water resources, especially in North China. Watertech venture investment is expected to reach US$100 million in 2008. (See Figure 19.)

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Fig. 19: Projected Cleantech Investment Segments for 2007 and 2008


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EnergyStorage

EnergyGeneration

EnergyEfficiency

Materials Agriculture Water

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2007 2008



CONCLUSIONS

CONCLUSIONSVenture capital is still only a small portion of cleantech investing activity in China. The concept of venture capital was actually introduced into the country about a decade ago along with the partial adoption of a market economy. With a long history of a centralized planned economy, venture capital market potential came into practice only in the past three years.

There are several key drivers behind venture capital investing in Chinese cleantech companies. With significant economic development and rapid growth of its GDP, China is facing serious issues of environmental deterioration, energy scarcity and resource restrictions. The newly enforced Renewable Energy Law and the 11th 5-Year Plan set targets for reducing energy consumption per unit GDP that are seen as overly ambitious, putting stress on the country’s initiatives.

Most proactive venture capital investors are multinational firms instead of local Chinese ones. Chinese venture capital companies mainly can be traced back to government-backed entities. There is no significant shift in China from companies exporting products to companies producing and selling products domestically, although some supply intermediate products to companies with overseas end users.

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International pressure on climate change issues and the market potential for Clean Development Mechanism (CDM) projects will encourage the country to reinforce the execution of the Renewable Energy Law, thus generating rapid growth of investment opportunities in the fields of energy efficiency and carbon emissions.

Climate change will inevitably aggravate the scarcity of water resources in China. Water resource management, wastewater treatment and recycling are the next booming segments along with energy efficiency.

The Chinese cleantech business environment has been significantly improved during the past years. Nevertheless, investment advisors, lawyers, venture capital associations and others are finding even better methodologies for venture capital investment and exits under a predictable cleantech “ecosystem.”

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Your audience will recognize that the research data is not only from an independent third party, but the leading brand in the space, Cleantech Group LLC. This report can be used to increase attendance at events, to promote sales lead programs, to leverage brand positioning of your business as a thought leader, and to create client goodwill and provide ongoing visibility with key clients, customers and partners.

By sponsoring Cleantech Group LLC’s 2005-Q2 2007 Global Cleantech Investment Report, you can capitalize on the high brand recognition and strong reputation for quality information that global media, investors, thought leaders and policy makers have relied on since 2002.

Your audience will recognize that the research data is not only from an independent third party, but the leading brand in the space, Cleantech Group LLC. This report can be used to increase attendance at events, to promote sales lead programs, to leverage brand positioning of your business as a thought leader, and to create client goodwill and provide ongoing visibility with key clients, customers and partners.

How can you position yourself as a cleantech specialist in the mind of key customers, clients, partners and investors?

Premier Report Sponsor • Guaranteed only sponsor for report• Logo on front cover and back cover• Option to write the introduction• Full page ad in the publication• Logo included on all marketing collateral• Full membership in Cleantech Network for one year (must qualify)

• Two registrations for each Cleantech Forum™• Two seats at each VIP Forum and Gala Dinners (when available) • Identifi ed as a source for global media contact at forums and throughout the year. • One week advance of report for distribution to your contact list

Platinum Sponsor (only one)

• Discipline exclusive• 1st place on cover for logo• Full page ad in front of report• Logo included on the Cleantech Network™ website promoting publication• Logo included on all marketing collateral• Write the introduction for the report• 24 hour advance of report with only your logo to send to your contact list; the report then will be available for download on our site.

Silver Sponsor

• 3rd place on cover for logo• Full page ad in back of report• Logo included on the Cleantech Network™ website promoting publication• Logo included on all marketing collateral• 24 hour advance of report with only your logo to send to your contact list; the report then will be available for download on our site.

Gold Sponsor (only one)

• 2nd place on cover for logo• Full page ad behind Platinum Sponsor• Logo included on the Cleantech Network™ website promoting publication• Logo included on all marketing collateral• 24 hour advance of report with only your logo to send to your contact list; the report then will be available for download on our site.

Gold Sponsor

• 2nd place on cover for logo• Full page ad behind Platinum Sponsor• Logo included on the Cleantech Network™ website promoting publication• Logo included on all marketing collateral• 24 hour advance of report with only your logo to send to your contact list; the report then will be available for

Silver Sponsor

• 3rd place on cover for logo• Full page ad in back of report• Logo included on the Cleantech

download on our site.

• 24 hour advance of report with only your logo to send to your contact list; the report then will be available for

• One week advance of report for distribution to your

• 24 hour advance of report with only your logo to send to your contact list; the report then will be available for

publication• Logo included on all marketing collateral• 24 hour advance of report with only your logo to send to your contact list; the report then will be available for download on our site.

• Logo included on the Cleantech Network™ website promoting publication

Sponsorship has benefi ts

For more information contact:email: [email protected] phone: (+1 810) 224-4310 x7151

Cleantech Group™, LLC.:Ann Arbor, MI

+1 810.224.4310

Cleantech China™, LLC.:Jerry Li

China Country DirectorBeijing Offi ce

+86 [email protected]

Membership Inquiries:Cleantech Network™

Ann Arbor Offi ce+1 810.224.4310 ext. 7150

[email protected]

www.cleantech.com

china cleantech venture capital investment report · 2007-11-09 · cleantech network™, and...

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