The venture capital industry is known for becoming transfixed on certain niches. These days, that niche is clean energy companies. 

The venture capital industry has taken a beating the last few years as funding sources have withered away and died. For companies looking for traditional venture capital funding, success is often a matter of being in the trending area. This year, clean energy remains the hot spot, perhaps more so given the unfortunate nuclear disaster in Japan. 

To look forward, we must first look back. In 2010, the venture capital industry invested fully 23 percent of their total funds in clean energy technology companies. That is a huge percentage compared to just five years ago when the figure was in the single digits. Total monetary value of the investments was over five billion dollars, a health chunk of change.

What can we expect in 2011? Well, everything depends on the economy as usual. The credit market is still suffering and the jobless recovery is putting pressure on upwardly mobile investors. Although clean tech investments are a sizeable part of the venture capital market, the market as a whole is down dramatically from its pre-recession years and remains so. Will it come back strong in 2011? Unfortunately, I doubt it.  

The overall problem is the economic environment we are in. From distress in the Middle East to the horrific mess in Japan, it is fairly clear that the threats to the current economic recovery are not only vast, but credible. Traditionally, this has resulted in major pull backs in the venture capital industry as available funds are hard to find. 

While I doubt we will see a strong recovery in venture capital in 2011, this should not dismiss the possibilities for clean tech companies. If your business falls within this niche, funding is a real possibility.