Venture capital funding in smart grid sector goes flat

Smart grid venture capital funding in the first quarter of 2013, totaled $62 million in nine deals

Apr 24th, 2013

Smart grid venture capital funding in the first quarter of 2013, totaled $62 million in nine deals. The quarter's funding was nearly identical to the first quarter of 2012, when the same amount was raised by smart grid companies but in 10 deals instead of nine.

This is according to Mercom Capital Group, a global clean energy communications and consulting firm.

With the exception of home security and automation company, Alarm.com's $136 million raise in the third quarter of 2012, the pace of funding has remained largely unchanged for the past five quarters.

"After peaking in Q2 2010, venture capital investments in smart grid have slowed down considerably, and continue to amble along with no clear direction," said Raj Prabhu, CEO of Mercom Capital Group. "Silver Spring Networks' long awaited IPO was the lone highlight in an otherwise slow quarter."

The Top 5 venture capital deals in the first quarter of 2013 raised a combined $52 million. The top two venture capital deals each raised $15 million. Cylance, a provider of cyber security products for the infrastructure industry, raised $15 million from Khosla Ventures and Fairhaven Capital in a Series A round, and Sentient Energy, a developer of advanced grid monitoring solutions that consist of modular intelligent monitoring devices and software applications, raised $15 million in an undisclosed round from Foundation Capital.

That was followed by the $11.3 million raise by Utility Funding from Foresight Group; $5.8 million raised by Xtreme Power by a group of investors including SAIL Capital Partners, Bessemer Venture Partners, Dow Chemical, Fluor, Dominion Power, Spring Ventures, BP and Posco; and $4.8 million raised by Smarter Grid Solutions from Scottish Equity Partners, Scottish Investment Bank and the University of Strathclyde.

There were only four M&A transactions in Q1 2013. One of the transactions; Toshiba Corp.'s acquisition of privately-held energy management company Consert, was disclosed for a total of $11 million. Last quarter, $22 million in M&A activity was disclosed in the same number of transactions.

Despite a rather slow quarter, the smart grid sector saw a rare IPO. Silver Spring Networks, a provider of smart grid products and services to utilities, raised $81 million by offering 4.75 million shares at $17.

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