California leads the nation in green-tech venture capital funding When it comes to U.S. venture capital funding for the most promising new green technology firms, there's California and there's everybody else. California companies raked in $2.8 billion, or 57%, of the $4.9 billion in venture capital offered up in the so-called clean-tech category of funding nationwide last year, according to a recently released analysis from Ernst & Young. Massachusetts companies were a distant second with $465.1 million, followed by Colorado companies, which pulled in $363.3 million. "It's a good indicator of the innovation that can be found here and of the opportunities available in California," said Mark Sogomian, an Ernst & Young partner and leader of its clean-tech group in Los Angeles. California has that "secret sauce that allows companies to grow and develop and gain capital," Sogomian said. The $4.9 billion in total venture funding was a 4.5% decline from 2010. But Jay Spencer, Ernst & Young's Americas clean-tech director, said the amount was encouraging for an industry still finding its footing in a weak economy. "Clean-tech is still in the early stages of a long-term journey," Spencer said. We've reached a point where new products and services are ready to be launched, and as these products come to market, we're seeing renewed interest, innovation and opportunity. California companies also were leaders in their respective green-tech categories, the Ernst & Young analysis showed. The energy and electricity generation segment, for example, pulled in the largest share of venture capital funding: $1.5 billion. The biggest fourth-quarter deal was the $130 million raised in December by Stion Corp., a San Jose manufacturer of thin-film solar panels. The investment came from AVACO, a provider of thin-film processing equipment, and South Korean private equity funds. In the industry products and services segment, Better Place in Palo Alto raised the most in the fourth quarter with $201 million in funding in November. The company owns and operates a network of battery switch stations and charge spots for electric vehicles. Green-tech companies nationwide raised a total of about $688 million in initial public offerings last year. Rentech Inc., a Los Angeles provider of clean energy solutions, raised $136.8 million in November. Its products have included a renewable synthetic diesel fuel. Intermolecular Inc., a San Jose research and development company for the semiconductor and clean-energy sector, raised $96.5 million. Northern California green-tech firms received three times as much funding as their Southern California counterparts last year. But Sogomian said there were promising opportunities for green-tech growth in the Southland, in part because of efforts to reduce pollution at the nation's two busiest cargo container seaports, Los Angeles and Long Beach. Both ports have been providing seed money for start-up technologies designed to reduce diesel pollution and to increase the use of alternative energy sources. "It's happening slowly, but it is happening," Sogomian said. They are creating incubator environments that are specifically focused on making the ports cleaner. If this can get more attention, more of the future venture capital funding will come to Southern California.