Smart grid VC funding drops by half in 2011


Raj Prabhu,
Managing Partner,
Mercom Capital Group
Austin, TX, U.S.A. — (METERING.COM)  — January 17, 2012 – The downward trend in venture capital funding for smart grid continued in Q4 of 2011 with the total for the year at $377 million, down by half compared with $769 million in 2010, according to Mercom Capital Group, llc, in its latest annual roundup.

However, the number of deals remained very similar, numbering 50 (24 disclosed) in 2011, as against 51 (27 disclosed) in 2010.

Smart grid communications technology companies raised almost half of the VC funding in 2011, with $185 million in 20 deals.

The top VC funding deals in 2011 were broadband home management company iControl Networks ($51.6 million), cellular-based smart grid solution provider SmartSynch ($25.7 million), network equipment provider Silver Spring Networks ($24 million), energy management solutions provider Gridpoint ($23.6 million) and JouleX, a provider of energy management systems for data centers ($17 million).

The top VC investors in 2011 were GE (six deals), Emerald Technology Venture (five deals) and Kleiner Perkins Caufield & Byers (five deals). The same investors were the top three last year with 12, ten and ten deals respectively. Other top investors were Foundation Capital, Intel Capital and Rockport Capital with four deals each.

“VC funding in smart grid was anemic at best in 2011,” commented Raj Prabhu, managing partner at Mercom Capital Group. “Interestingly, the number of VC investors increased to 92 from 87 in 2010, pointing to continued investor interest but lower risk appetite.”

There were also some major M&A transactions in 2011. Top transactions were the $2.3 billion acquisition of smart meter company Landis+Gyr by Toshiba and the $2 billion acquisition of realtime IT and monitoring services provider Telvent by Schneider Electric. The acquisition of eMeter by Siemens was also significant, although the acquisition details were not disclosed,.

Only four transactions had acquisition details out of 30 total transactions, pointing to a much higher amount than the $4.6 billion in M&A activity in 2011. By comparison, 2010 saw 40 M&A deals amounting to $1.3 billion, though only four were disclosed.