Proving the Business Case for the Internet of Things

VC funding falls for smart grid companies, reports Mercom

Steve Rogerson
January 30, 2020



Global VC venture capital, private equity and corporate venture capital funding for smart grid, battery storage and energy efficiency companies in 2019 was down 18% at $2.3bn compared with $2.8bn raised in 2018, according to Mercom Capital Group.
 
And total corporate funding including venture capital funding, public market and debt financing for the sectors in 2019 was down 22% at $3.8bn compared with $4.9bn in 2018.
 
Smart grid companies raised $300m in VC funding in 38 deals in 2019, a 43% decrease from the $530m raised in 29 deals in 2018. Total corporate funding, including debt and public market financing, came to $372m in 41 deals, compared with $1.8bn in 33 deals in 2018.
 
The top VC funded companies in 2019 were Smart Wires, which brought in $75mn, eSmart Systems, which received $34m, SmartRent, which secured $32m, CleanSpark with $20m, and Volta Charging with $20m.
 
Seventy-eight investors funded smart grid companies in 2019, compared with 69 in 2018. The top VC investor in 2019 was Shell, which was involved in four funding deals followed by Energy Impact Partners with three deals. Other prominent investors included Total and Centrica with two deals each.
 
Grid optimisation companies had the largest share of VC funding in 2019 with $85m in four deals, followed by data analytics companies with $58m in six deals and smart grid communications companies with $52m in five deals.
 
In 2019, three debt and public market financing deals totalling $72m were announced compared with $1.3bn in four deals in 2018. There were no IPOs announced for smart grid companies in 2019.
 
In 2019, there were 29 M&A transactions (one disclosed) recorded in the smart grid sector. In 2018, there were 12 undisclosed transactions.
 
VC funding for energy efficiency companies fell sharply with $298m in nine deals in 2019 compared with $1.5bn in 23 deals in 2018, an 80% decrease largely due to the $1.1bn deal raised by architectural dynamic glass developer, View, towards the end of 2018. Total corporate funding, including debt and public market financing, reached more than $670m in 2019 compared with $1.7bn in 2018.
 
The top VC funded companies in 2019 were Kinestral Technologies, which raised $100m, followed by Budderfly with $55m, Cimcon Lighting with $33m, Carbon Lighthouse with $33m and Arcadia Power with $30m.
 
A total of 38 investors participated in funding deals in 2019 compared with 72 investors in 2018. Energy Impact Partners was the most active investor in 2019.
 
In 2019, debt and public market financing announced by energy efficiency companies rose to $371m in three deals compared with $277m in the same number of deals in 2018.
 
In 2019, there were three property accessed clean energy (pace) financing deals bringing in $709m compared with the same number of deals that brought in $694m in 2018.
 
M&A activity for efficiency companies in 2019 increased with nine transactions, two of which disclosed the transaction amount. In 2018, there were seven M&A transactions with one that disclosed the transaction amount.
 
In 2019, VC funding into battery storage companies increased by 103% to $1.7bn in 32 deals compared with $850m in 49 deals in 2018. This increase was primarily due to Northvolt’s $1bn deal in 2019. Total corporate funding, including debt and public market financing, increased to $2.8bn in 2019 compared with $1.3bn in 2018.
 
Lithium-ion based battery technology companies received the most funding in 2019 with $1.4bn. Other categories that received funding included gravity storage, flow batteries, CAES, energy storage downstream, fuel cells, liquid metal batteries, thermal energy storage, solid-state batteries, sodium-based batteries and zinc-air batteries.
 
The top VC funded companies in 2019 were Northvolt with $1bn, Sila Nanotechnologies with $170m and $45m in two deals, Energy Vault with $110m, and Romeo Power with $89m.
 
Seventy-eight VC investors participated in battery storage deals in 2019 compared with 73 in 2018. BASF Venture Capital, Breakthrough Energy Ventures and Macquarie Capital were the top investors in 2019. Utilities and oil and gas companies were involved in seven battery storage funding deals in 2019.
 
In 2019, announced debt and public market financing for battery storage companies increased to $1.1bn in ten deals compared with $494m in 12 deals in 2018. Northvolt’s $393mn loan was the largest debt financing deal in 2019.
 
There were ten M&A transactions in the battery storage category in 2019, of which only two disclosed transaction amounts. In 2018, there were 16 M&A transactions, three of which disclosed transaction amounts.
 
The most prominent M&A transaction in the battery storage space was the acquisition of Sonnen by oil major Shell early in the year.