Smart grid venture capital exceeded $100 million in Q2 2009


Eric Wesoff,
Senior Analyst,
GTM Research
Cambridge, MA, U.S.A. — (METERING.COM) — July 6, 2009 – Venture capital in energy efficiency, demand response and the smart grid was sharply up in Q2 of 2009, exceeding $101.4 million in 11 deals, according to data from Greentech Media.

This compares with venture capital funding of $27.5 million in four deals in Q1 of 2009. It also indicates an increase in the average size of the deals, up to $9.2 million from $6.9 million in the earlier quarter.

In total, venture capital investment in green technologies in Q2 2009 totaled $1.17 billion in 85 deals during this period. The corresponding Q1 figure was $836 million in 59 deals.

Solar continues to be the leading sector in terms of dollars and deals at $333.3 million in 17 deals, slightly down from the $356.6 million in 14 deals in Q1 2009. Energy efficiency, demand response and the smart grid is in fifth position, behind automotive, biofuels, and batteries and energy storage.

One of the drivers for steady second quarter venture investment was the promise of stimulus monies offering startup investors a non-dilutive funding source, according to a statement from Greentech Media. Meanwhile, early stage and late stage investments dominated, while mid-stage funding was harder to come by, and the average round sizes were slightly smaller.

“Despite the economic slump, venture capital investors remain optimistic about the greentech sector and eventual exits in this space,” said Eric Wesoff, senior analyst at GTM Research and author of the Greentech Innovations Report. “2009 will be a year of consolidation and development while 2010 and 2011 will be the year greentech breaks. Expect to see IPOs and acquisitions of VC funded firms in solar, smart grid, green buildings and biofuels.”