Legal Update: CleanTech Strategic Fund
April 6, 2011
The Nova Scotia government has decided to support its growing clean technology industry and help spur innovation in this growing sector with its announcement on April 13th of the creation of a $24 million provincial cleantech strategic fund. This fund will provide opportunities for early stage and venture capital investments in cleantech companies in Nova Scotia. This builds on the recent success Nova Scotia cleantech companies had in San Francisco at a session hosted by the Canadian Consulate and the C100 Cleantech Practice. Three of five companies selected from the fifteen to pitch at the subsequent internationally focused Cleantech Forum in San Francisco were from Nova Scotia. These firms were Carbon Cure Technologies (Carbon Sense Solutions), Green Power Labs and Seaforth Energy.
The Cleantech Strategic Fund will be administered by the provincial agency Innovacorp and will be accessible to those companies operating within the growing clean technology sector. Innovacorp currently manages the Nova Scotia First Fund (NSFF), which has over $40 million in committed investments in emerging technology companies in Nova Scotia, including in the clean technology, information technology and life sciences sectors. Innovacorp will seek to leverage other sources of public and private funding as well.
Clean technology is a relatively new industry classification that refers to technology companies seeking to reduce the use of natural resources and cut or eliminate waste or greenhouse gas emissions. Companies that would be captured under the clean technology banner include companies involved in the research, development and commercialization of renewable energy, such as solar, wind, biomass and biofuels. Other companies captured under the classification include those focusing on new and innovative solutions for improving air and water quality, enhancing energy efficiency, storing greenhouse gas emissions or reducing impacts upon the environment.
Clean technology investing is quickly becoming a darling for venture capital investors in the United States. In 2010 alone, U.S. investors pumped $3.7 billion into the sector with that number sure to increase in 2011. In the first quarter of this year, worldwide investment (of which North America accounted for 85 per cent) in clean technology topped out at $2.57 billion. The hottest segment within the sector since 2010 has been solar energy, accounting for a disproportionate amount of investor dollars.
Canadian venture capital investment in the sector is strong but lags behind the U.S. in terms of scale. The clean technology sector took in $187 million in venture capital investment in 2010 which accounted for 17 per cent of all venture capital money invested in Canada. However, when compared to the $3.7 billion invested in the U.S. over the same time period, it is clear that the sector is significantly under-funded in Canada. The creation of the Nova Scotia clean technology fund will cure some of this under-funding and spur further investment within the sector.
Nova Scotia is positioning itself as a leader in the clean technology industry with its increasing focus on wind and tidal generation. The announcement of the $24 million fund is an exciting step for the sector and shows the province’s commitment to providing the funding necessary for the growth of clean technology companies operating within the province.
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