Venture capital flowing to EV charging and smart glass firms, Mercom shows

Venture capital funding for smart grid companies rose nearly 300 percent in the first quarter compared to the preceding three months

Apr 25th, 2017
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Venture capital funding for smart grid companies rose nearly 300 percent in the first quarter compared to the preceding three months, according to a new report from Mercom Capital Group.

Some $164 million in private equity and corporate money flowed into smart grid ventures for the first three months of 2017. This funding, spread out over 14 deals, compared to $46 million and six deals in the fourth quarter 2016 and nearly 50 percent higher than the same period a year earlier.

Electric vehicle charging network firm ChargePoint secured $82 million in what was easily the biggest smart grid venture capital flow of the quarter. Investors included Daimler, BMW I Ventures, Linse Capital, Rho Capital Partners and Braemar Energy Ventures, according to Mercom.

Smart grid startups rose faster in investment attention, but energy efficiency technology companies still dominated the quarterly venture capital report. Energy efficiency firms gained $213 million in 14 deals, compared to $170 million in the previous year and $211 million in year-over-year comparison.

Electrochromatic window maker View, formerly called Soladigm, topped EE venture capital destinations with $100 million invested by TIAA, an affiliate of Nuveen. Glass seemed to be where it’s at, for smart tinter Kinestral Technologies also attracted $65 million in venture capital.

“View’s $100 million raise was the big deal this quarter and they have now raised over half a billion dollars,” said Raj Prabhu, CEO and Co-founder of Mercom Capital Group. “Smart glass/windows used to be a niche area, but obviously it is not any more. TIAA is an affiliate of Nuveen with about $900 billion in assets under management, meaning the company has some very deep-pocketed investors betting big on its technology.”

Battery storage is all the rage in many smart grid conversations and conferences this year, but venture capital funding for the sector actually dropped in comparison to the previous quarter and barely exceeded the same period last year. Those companies raised $58 million in eight deals, compared to $156 million for 2016’s fourth quarter and $54 million in 10 deals for 2016’s first quarter, according to Mercom.

Mercom’s Prabhu warned not to read too much into that drop.

“VC funding into battery storage fluctuates regularly, so we can’t take one quarter’s results and label it as a trend,” he said. “Clearly, battery storage is a huge up-and-coming market and we expect to see more money go towards installations and projects in the future.”

Fifteen investors piled funds into battery storage this quarter with flow battery companies topping the list of investment targets. The top beneficiary was Primus Power, which raised $32 million from Success Dragon, Matador Capital, Anglo American Platinum, DBL Partners, I2BF and the Russia Kazakhstan Nanotechnology Fund.

Twelve merger & acquisition deals were transacted in the first quarter for all three sectors. Seven of those were in smart grid technology, compared to two in the previous quarter. Four of the M&A deals were in energy efficiency and one in battery storage, according to Mercom.

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