Proving the Business Case for the Internet of Things

Smart grid sector sees jump in venture capital funding, says Mercom

Steve Rogerson
April 28, 2015
 
Venture capital (VC) funding in the smart grid sector in the first quarter of 2015 came in at $185m in 15 deals, compared with $59m in 13 deals in the final quarter of 2014, according to Mercom Capital Group. There were four early stage deals, including three series A and one seed funding deal in Q1.
 
Mercom Capital Group, a Texas-based clean energy communications and consulting firm, released its report this month on funding and mergers and acquisitions (M&A) activity for the smart grid, battery and storage, and energy efficiency sectors for the first quarter of 2015.
 
There were 37 VC investors including one accelerator who participated in VC funding rounds in the first quarter. Within smart grid, smart grid communications technology companies received the most funding. EnerTech Capital was the only investor participating in multiple deals this quarter with three.
 
The top VC funded deal in Q1 2015 was the $115m raised by Sigfox, a wireless connectivity provider for smart metering, building intelligence and M2M using ultra narrow band technology. Other top deals for the quarter were: the $15m raised by Tempered Networks, a cyber-security company; the $14m raised by Blue Pillar, a provider of software for real-time visibility and control into distributed energy assets; the $11m raised by Enbala Power Networks, a provider of demand-side grid optimisation services for commercial and industrial large-scale electricity users; and the $8.4m raised by Trove Predictive Data Science, a provider of applications for load forecasting, revenue protection, demand-side management and programme planning for utilities.
 
There were seven smart grid M&A transactions (four disclosed) totalling $196m. The top disclosed transaction was the acquisition of AlertMe, a home automation platform, energy monitoring and control, and analytics provider, by British Gas – part of the Centrica group – for $100m. Bluegiga Technologies, a Finland-based provider of short-range wireless connectivity and software for home automation and industrial automation, was acquired by Silicon Labs for $61m. RadioPulse, a Seoul-based developer of Zigbee for AMR, wireless automation, home network and high technology markets, was acquired by Ixys for $22.5m. Detectent, a provider of utility data analytics, was acquired by Silver Spring Networks for $12m.
 
VC funding for battery and storage companies came to $69m in seven deals, compared with $47m in seven deals in Q4 2014. The top deals include the $20m raised by Boston Power, a manufacturer of lithium-ion batteries for electric vehicles and stationary energy storage, and the $20m raised by Sakti3, a developer of solid-state rechargeable lithium-ion battery technology.
 
Eos Energy Storage, a developer and manufacturer of zinc hybrid cathode energy storage for electric utilities, raised $15m. TAS Energy, an energy storage provider that combines turbine chilling with thermal energy storage tanks, raised $10m. And ZAF Energy Systems, a developer of nickel-zinc and zinc-air battery technologies, raised $2.2m.
 
There was just one debt and public market financing deal announced for battery and storage technology, the $130m raised by Bloom Energy, a manufacturer of solid oxide fuel cell technology products.
 
There were five M&A transactions in the battery and storage category, of which only two disclosed funding amounts totalling $2.3bn.
 
VC funding for the efficiency sector came to $140m in 15 deals, compared with $192m in 25 deals in the previous quarter. The top VC deal was by Verne Global, a developer of energy efficient data centres, securing $98m, followed by Terralux, a designer and manufacturer of LED lighting and building intelligence products, which raised $11mn. RayVio, a solid-state ultraviolet LED provider, raised $9.3m. Tendril, a provider of an open, cloud-based energy services management software platform that delivers the infrastructure, analytics and understanding required to personalise energy usage, raised $7.2m. And Lucid Design Group, a provider of a building operating system for intelligent buildings that connects hardware, software and people through a collaborative interface, raised $5.9m.
 
Efficiency companies also raised $183m in debt and public market financing in three deals in Q1 including one IPO. MLS, a Chinese LED manufacturer and the parent company of USA-based Forest Lighting, raised $154m through its initial public offering and began trading on the Shenzhen Stock Exchange in China in March 2015.
 
There were 11 M&A transactions in the efficiency sector, of which five disclosed details totalling $3.1bn, compared with ten transactions disclosed for $131m in Q4 2014. The largest disclosed transaction was the $2.8bn acquisition of an 80.1 per cent interest in Lumileds, a Royal Philips LED lighting components business, by GO Scale Capital Investment Consortium, an investment fund sponsored by GSR Ventures and Oak Investment Partners.