Proving the Business Case for the Internet of Things

Smart grid sector sees doubling of venture capital funding

Steve Rogerson
July 27, 2016
 
Venture capital funding including private equity and corporate venture capital for smart grid companies doubled in the second quarter of this year with $222m in 15 deals compared with $110m in 14 deals in the first quarter, according to Mercom Capital Group.
 
Year-over-year, funding also doubled compared with Q2 2015 when $104m was raised in 18 deals.
 
The top VC funded smart grid related technology companies included:

  • Vivint Smart Home, which raised $100mn from tech investor Peter Thiel and investment firm Solamere Capital;
  • ChargePoint, which raised $50m from Linse Capital, Braemar Energy Ventures, Constellation Energy, Statoil Energy Ventures, Envision Ventures, Jan Klatten, Michael Liebreich and Rick Wagoner;
  • AutoGrid Systems, which raised $20m from a consortium of global investors including Energy Impact Partners, Envision Ventures, Envision Energy and E.On;
  • Origami Energy, which brought in $19.5mn from Cambridge Innovation Capital, Octopus Ventures and Fred Olsen-related companies; and
  • Comfy secured $12m in funding from Emergence Capital, CBRE Group, Microsoft Ventures, Claremont Creek Ventures and Westly Group.
There were 46 VC investors that participated in smart grid deals in Q2 2016 compared with 22 in Q1 2016. Smart grid communications technologies, including home automation, had the largest share of VC funding with $123m, an increase from the $31m raised in four deals in Q1 2016.
 
There was one debt financing deal announced in the second quarter of 2016 for $3m, compared with $214m in two debt and public market financing deals in the previous quarter.
 
There were three M&A transactions for smart grid technologies in Q2 2016 (one disclosed) compared with two transactions (one disclosed) in Q1 2016.
 
VC funding for battery and storage companies doubled with $125m in ten deals in Q2 2016 compared with $54m in ten deals in the previous quarter. Year-over-year funding in Q2 2016 was in line with Q2 2015, which had $126m in 13 deals.
 
VC funding in Q2 2016 was spread across six battery and storage sub-technologies – lithium-ion batteries, sodium-based batteries, energy storage systems, lead-based batteries, energy storage management software and thermal energy storage.
 
The top five battery and storage VC funding deals were:
  1. Nexeon with $43.3mn from PUK Ventures, Imperial Innovations, Invesco Perpetual, Wacker Chemie and Woodford Investment Management;
  2. Aquion Energy with $33m;
  3. Stem with $15m from Mithril Capital Management;
  4. Greenvision Technologies (brand name Relicell) with $8m from Vintage Energy & Resources; and
  5. Silatronix with $8m from Hitachi Chemical and Inabata.
Twenty investors participated in battery and storage funding in Q2 2016 compared with eight in Q1 2016. Lithium-ion battery companies raised the most funding with $51.3m in three deals.
 
Announced debt and public market financing for battery and storage technologies came to $65m in two deals in the second quarter of 2016, compared with $28.5m in two deals in Q1 2016. Plug Power and FuelCell Energy closed on long-term loan facilities for $40m and $25m, respectively, with Hercules Capital.
 
There were four M&A transactions for battery and storage companies in Q2 2016, two of which disclosed financial details. In Q1 2016, there were two M&A transactions, neither disclosed transaction details. The largest M&A deal in the second quarter of 2016 was the $1.1bn acquisition of Saft by Total.
 
There was a sharp decline in VC funding for energy efficiency technology companies in Q2 2016 with $86m in nine deals compared with $211m in 14 deals in Q1 2016. In a year-on-year comparison, VC funding for efficiency companies in Q2 2015 was $211m with twice as many deals with 18.
 
The top VC funded company in Q2 2016 was Thermondo which raised over $25.6m in funding from Global Founders Capital, E.On, Holtzbrinck Ventures, IBB and Picus Capital, followed by Tado°, which raised $23m in funding from Inven Capital, Electric Imp which raised $21m in funding from Rampart Capital and Redpoint Ventures, and Kyulux which raised $13.5m from Samsung Venture Investment, Samsung Display, LG Display, Japan Display, Joled, top tier Japanese venture capital funds and a Japanese government affiliated venture fund.
 
Eighteen investors participated in energy efficiency VC deals in Q2 2016 compared with 31 in the previous quarter.
 
Announced debt and public market financing in the efficiency category peaked in the second quarter of 2016 with $1.75bn in seven deals. In Q1 2016 there were two debt deals for $238m.
 
There was one initial public offering (IPO) in the efficiency category, by Philips Lighting, which accounted for $959m.
 
M&A transactions in the efficiency sector doubled in the second quarter of 2016 with seven transactions (three disclosed) compared with three transactions in Q1 2016 of which only one disclosed details. The top deal was the $532m acquisition of Opower by Oracle. Another notable deal was the merger of Dividend Solar and Figtree Financing.