Clean-Energy Venture Funding Almost Doubles

Venture capital firms sank money into companies that help produce alternative energy and reduce pollution.
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BOSTON (

TheStreet

) -- Clean-energy investments outpaced software funding in the third quarter, buoyed by the Obama administration's support of technology to reduce America's reliance on oil.

Venture capital firms invested $4.8 billion in 637 deals from July through September, according to a report from

PricewaterhouseCoopers

and

The National Venture Capital Association.

Government spending on early-stage research projects has been a driving force in the funding of clean-energy companies, according to Emily Mendell, vice president of strategic affairs for the NVCA. Clean-energy funding has been a priority of the American Recovery and Reinvestment Act of 2009, which was passed to pull the U.S. out of the longest recession since the 1930s.

Biotechnology scored the most money for the quarter, with $905 million allocated for 104 deals, compared with $947 million and 90 transactions in the second quarter, according to the report, which was based on data from

Thomson Reuters

(TRI) - Get Report

. Funding for clean technology -- alternative energy, pollution and recycling services, power supplies and conservation -- jumped 89% to $898 million for 57 deals. The biggest transaction in the period was for

Solyndra Inc.

, which designs solar panels and mounting hardware. The company received a funding round totaling $286 million. Clean technology accounted for three of the top 10 deals.

The software industry received $622 million for 128 deals, compared with $680 million for 141 rounds of funding in the second quarter. That was the lowest level in 13 years, before the dot-com bubble. Semiconductors, health-care services, computers and peripherals, and telecommunications also suffered declines.

Cisco

(CSCO) - Get Report

for more than a month has been pushing its "smart grid" energy-efficiency initiative, which includes such partners as

EMC

(EMC)

,

General Electric

(GE) - Get Report

,

Oracle

(ORCL) - Get Report

and

Verizon

(VZ) - Get Report

.

Even oil companies are investing in solar energy.

Chevron

(CVX) - Get Report

sank money into

BrightSource Energy

last year via its Chevron Technology Ventures arm. Last summer, BrightSource landed a contract to build a solar power plant in the middle of one of Chevron's California oil fields.

Earlier this week,

Chipotle

(CMG) - Get Report

announced a contract with

Standard Renewable Energy

to install solar panels at 75 of its restaurants over the next year.

Regarding the fact that software companies are receiving more deals but less money than clean-energy firms, "harnessing the energy of the sun is clearly more capital intensive than blogging software," Mendell says.

-- Reported by Carmen Nobel in Boston.