Venture capitalists pump $1.2 billion into alternative energy in second quarter, with stimulus driving interest.

Investor interest in clean energy technology companies may be on the rebound after a dismal start to 2009. Venture capitalists invested $1.2 billion in 94 "cleantech" companies in the second quarter of the year, a 12% increase over the first quarter, when global investment bottomed due to the global banking crisis. Average round size for the quarter was $12.9 million, up from $12.3 million in the fist quarter. The data was compiled by accounting firm Deloitte and the consultancy Cleantech Group.

Investment in venture-stage cleantech companies was nevertheless down 44% from the same period in 2008, when global investment in technologies such as photovoltaics, advanced batteries and enzymes for the production of biofuels reached $2.7 billon.

The hardest-hit sector was solar, which attracted just $112 million in new investment during the quarter, a fraction of the $1.2 billion in investment during its peak in the third quarter of 2008. Last year venture capitalists made a total of at least 20 investments of $100 million or more in thin film photovoltaic companies like Silicon Valley's NanoSolar and concentrating solar power companies such as Brightsource, Esolar and Ausra.

"Last quarter, as investors faced liquidity problems they focused on capital efficient companies," said Brian Fan, head of research at the Cleantech Group. "Ausra and Esolar have gone from building large concentrating solar plants, which can cost over $1 billion, to licensing their technology to utilities and other players," said Fan. That strategy attracted money from VCs, which continued to put money into prior solar investments, but invested little in new businesses.

Two sectors benefitted from a rising focus on clean transportation, particularly in the United States. Vehicle manufacturers took in $236 million during the second quarter. San Diego start-up V-Vehicles raised $100 million from Kleiner Perkins Caufield & Byers and T. Boone Pickens to retrofit an idled General Motors ( GMGMQ.PK - news - people ) production line in Louisiana, while Fisker Automotive raised $85 million to produce its luxury plug-in hybrid from Kleiner Perkins and Eco-Drive Partners. General Electric ( GE - news - people ) led a $100 million round in lithium-ion battery developer A123, which is building a factory in Michigan to supply Chrysler and other automakers.

Biofuels also benefitted from the focus on transportation. Investors put $206 million into the sector. "A lot of the leading companies in the biotech space are partnering up with large refineries, oil companies," said Fan. "The big oil companies and refineries have the skill and resources to scale up a 100,000 facility to a billion gallon facility. We're going to see more activity in this area."