Cleantech venture investment reached US$2.6 billion in the third quarter, according to the research firm Cleantech Group.

The firm reported that cleantech venture investments in North America, Europe, China and India totalled US$2.6 billion across 158 companies in the quarter. The previous record quarter was the second quarter, which saw US$2.2 billion in cleantech venture investments.

U.S. companies led the way, receiving a record US$1.75 billion in 77 financing rounds, accounting for 67% of the global total. Canadian companies received US$49 million in six investments. The amount invested in European companies was the highest ever recorded for a single quarter. Also, Chinese companies raised US$111 million in venture capital across seven rounds, accounting for approximately 4% of the global total, and Indian companies raised US$6.3 million.

“Cleantech venture investing has continued to show strong growth despite the unprecedented turmoil in the credit markets during the quarter,” says Michael Goguen, managing partner, Sequoia Capital and co-chair of the North American advisory board of the Cleantech Group’s Cleantech Network. “In the coming quarters, we could foresee large scale cleantech projects having to work harder to get financed. However, the capital efficient, early-stage companies addressing the inefficiencies of existing markets should see continued venture financings.”

Highlights from the quarter include an all-time high investment for smart grid companies, algae companies, and thin-film solar companies. Smart grid companies raised a record US$202 million, the algae sector saw over US$95 million in investments, and thin-film startups raised US$620 million

“The impending production of electric vehicles by major manufacturers, which will require utility companies to improve the electrical grid to manage plug-in vehicles, has spurred investment in smart grid companies,” said Brian Fan, senior director of research for the Cleantech Group. “We have seen the arms race in thin-film solar reach new heights, and now we are seeing it in the algae sector, as investors funnel ever-increasing amounts of capital to companies that have not yet successfully scaled up commercial production. Investors are doubling down to maximize the probability that their portfolio companies can keep up with competition and become winners in their respective markets.”

Cleantech mergers and acquisitions totalled an estimated 138 transactions in the quarter. The number of cleantech initial public offerings decreased to four deals worth US$587.1 million — down from six IPOs worth US$4.4 billion in the previous quarter. The Nasdaq composite index saw two cleantech IPOs, while the Toronto Stock Exchange and AIM each had one.