Jul. 1--After two sharp quarterly declines, worldwide venture funding for clean technologies rebounded in the second quarter of 2009 amid rising confidence -- particularly in Silicon Valley and throughout California.

From April to June, venture investments in clean tech totaled $1.2 billion across 94 companies, according to preliminary results released Wednesday by The Cleantech Group, a San Francisco research and strategy firm, and Deloitte & Touche.

Total investments were up 12 percent from the previous quarter, though down 44 percent from the same period a year ago. The average funding round was $12.9 million, up from $12.3 million in the first quarter.

The uptick didn't surprise Brian Fan, senior director of research at The Cleantech Group, who co-authored the preliminary report.

"In our conversations with investors and companies, we had a sense there would be a bottoming out toward the end of the first quarter," Fan said. "Unemployment was going up, but at a slower rate; we weren't seeing the public stock markets continuing to nose-dive; durable goods orders were up and so was consumer confidence. When it feels like things are evening out, investors start to feel more confident."

North America accounted for 66 percent of the total investments, according to the report, while Europe and Israel accounted for 21 percent, India for 11 percent and China for 1 percent.

Of the $1.2 billion invested, $395 million --

or 39 percent -- went to California companies. About $150 million of that went to Silicon Valley/San Francisco area companies.

"California is always typically 30 to 40 percent of the world's total," Fan said. "It's always leading the way."

Leading all sectors in the quarter was transportation, which includes vehicles, biofuels and advanced batteries. Fan said the total $236 million investment reflected the turmoil in the automobile industry, which in recent months has witnessed the bankruptcies of both General Motors and Chrysler, and a steep drop in sales at Toyota.

Historic opportunity

Investors see "a historic opportunity to enter that market to create companies and produce vehicles that somewhere down the road they can bring to market," Fan said.

Fan's co-author, Mark Jensen, managing partner of the Venture Capital Services Group at Deloitte, said these transportation-related companies aren't trying "to beat Detroit at Detroit's game," but are creating new technologies that will lead to greater efficiencies, such as higher gas mileage and lower fuel emissions.