Smart grid VC activity continued weak in Q1 2012


Raj Prabhu,
Managing Partner,
Mercom Capital
Austin, TX, U.S.A. — (METERING.COM) — April 17, 2012 – The lackluster venture capital (VC) investing trend in smart grid continued into this year with a weak first quarter of $62 million going into 10 deals, compared to the last quarter of 2011 with $66 million in ten deals, according to Mercom Capital Group’s latest quarterly review.

The top VC deal in Q1 2012 was the $30 million raised by Silver Spring Networks, followed by $13.7 million raised by Tendril. Other top deals included $7.7 million raised by Varentec, a start-up focused on “power routers” that can control power flows on the grid, $4.1 million raised by Vizimax, a designer and manufacturer of automation systems for grid modernization, and $4 million raised by Smart Wire Grid, a provider of smart wire technology to control power flows on transmission lines.

Eight VC investors participated in Q1, all participating in one deal each including Archangel Informal Investments, BDC Venture Capital, Braemar Energy Ventures, Hitachi, Khosla Ventures, Pasadena Angels, Tech Coast Angels and Yaletown Venture Partners.

“VC funding in the last year or so has been on a steady decline,” commented Raj Prabhu, managing partner at Mercom Capital Group. “There seems to be a disconnect in smart grid between consumer interest and awareness, and the market offerings of smart grid technologies and products.”

VC interest in the smart grid sector coincided and peaked after the $4.3 billion made available through the American Recovery & Reinvestment Act (ARRA) of 2009 for the purpose of grid modernization and smart grid.
M&A activity in smart grid in Q1 2012 was steady, with half a billion M&A dollars going into six transactions, of which three disclosed details. Top M&A transactions included the $382 million acquisition of RuggedCom by Siemens, the $100 million acquisition of SmartSynch by Itron, and the $49 million acquisition of Comverge by private equity firm H.I.G.Capital.

Other significant M&A transactions that did not disclose details included the acquisitions of Recurve by Tendril, and of Ecologic Analytics by Landis+Gyr.