Green startups finding it difficult to find green

The electric car startup had been on the cusp of securing another round of venture funding when that was scuttled by the financial market turmoil, Tesla Senior Director John Thomas said on Wednesday.

"The vault was closed to us," Thomas said.

Tesla is now waiting until it can secure low-cost taxpayer backed loans before re-starting work on the "Model S."

For many investors in early-stage companies, the 50 percent drop in oil prices in three months has been a big deterrent to making new investments in alternative energy.

"The biggest question on people's minds has to do with the price of crude oil, which is now hovering at $70 a barrel," said Glen Schwaber, general partner at Israeli venture capital firm Israel Cleantech Ventures. "From that perspective it can be a concerning time to be a clean tech investor."

Cleantech investment in early stage companies should fall off at the end of the current quarter, Schwaber added.

In the near term, companies seeking their first round of venture funding will have the toughest time because a frozen market for initial public offerings has made it virtually impossible for venture capital firms to take public their later-stage companies, according to U.S. trade group the National Venture Capital Association.

"If you can't get companies out through the IPO market, you have less time and less money to devote to new investments," said NVCA Vice President of Strategic Affairs Emily Mendell, who added that she expected cleantech to keep rising as a percentage of overall venture capital investment.

"I would be surprised if investment fell sharply in this area," she said.

The good news, according to many venture capitalists, is that with fewer dollars chasing the next big solar company or energy efficiency technology, there are good deals to be had.