Smart grid VC funding off a cliff in Q1 2011


Raj Prabhu,
Managing Partner,
Mercom Capital
Austin, TX, U.S.A. — (METERING.COM) — April 13, 2011 – Venture capital funding in the smart grid sector fell off the cliff in Q1 of 2011, with $76 million funded in 13 deals, according to Mercom Capital Group’s latest quarterly review of the sector.

In comparison, the VC funding in Q4 2010 was $188 million in 18 deals. In fact, according to the review, this has been the worst quarter in VC funding since Q3 2009.

“After a 2010 banner year for smart grid, it remains to be seen if the first quarter of 2011 was an anomaly or a trend,” commented Raj Prabhu, managing partner at Mercom Capital Group.

The first quarter of 2010 also started slow with only $89 million raised by VCs, but then picked up significantly in later quarters.

Twenty-one different VCs participated in the funding rounds, with the top five transactions accounting for almost 82 percent of total transactions, led by GridPoint with $24 million, Control4 with $15 million, Viridity Energy with $14 million, Powerit Solutions with $5 million, and UTILICASE with $5 million.

In terms of technologies demand response was the top with $42.6 million in four deals, followed by smart grid communications with $23.36 million in five deals.

Further, the U.S. accounted for most, with eight out of 13 total deals.

Merger and acquisition (M&A) activity in the smart grid sector was also down, amounting to $300 million in nine deals in Q1 of 2011. The most significant M&A transaction was Schneider Electric’s acquisition of Summit Energy for $268 million.