Smart grid venture capital funding comes in at $405mn in 2013


Following a burst of activity in Q4 2013 after a largely lackluster year, venture capital (VC) funding into smart grid technology companies came in at $405 million in 63 deals in 2013, Mercom Capital Group has reported in its latest quarterly review.

This compares to $434 million in 40 deals in 2012. Total corporate funding, including debt and public market financings, came to $579 million in 2013, compared to $506 million in 2012. There were 94 total VC investors in 2013, with 12 active investors participating in multiple deals.

The Q4 2013 activity netted $148 million in 31 deals – almost half the deals in 2013.

Almost half of all the VC funding in 2013, $190 million in 24 deals, was raised by home/building automation and energy management companies. Grid optimization companies raised $51 million in six deals, demand response companies raised $50 million in eight deals, and AMI companies brought in $32 million in eight deals, while three data analytics companies raised $16 million.

The top VC funded companies in 2013 were led by Nest Labs, which raised $80 million from Google Ventures and Venrock (and now is being acquired by Google for $3.2 billion).

Utilidata raised $20.5 million from Formation 8 Partners, Saudi Aramco Energy Ventures, Braemar Energy Ventures, and American Electric Power.

Space-Time Insight raised $20 million from Zouk Capital, Opus Capital Ventures, EnerTech Capital, and Novus Energy Partners.

Enlighted raised $20 million from RockPort Capital, DFJ JAIC, Kleiner Perkins Caufield & Byers, Draper Fisher Jurvetson, and Intel Capital. GreenWave Reality raised $19 million from The Westly Group and Craton Equity Partners.

There were also three IPOs in 2013 (including one in the fourth quarter), raising a combined $162.3 million. These were by Silver Spring Networks, which raised $81 million, Control4, which raised $64 million, and Ideal Power, which raised $17.3 million.

“Deal activity picked up towards the end of the year, and after a long pause, IPOs have made a comeback,” commented Raj Prabhu, CEO and co-founder of Mercom Capital Group. “After half a billion dollars of VC investments into home energy companies, the market is finally coalescing around connected home bundles as convenience is a better sell with consumers. A single vendor offering a bundle with cable, security, phone and other services and no upfront costs, has removed the barrier for these technologies to find their way into homes.”

There were 16 M&A transactions that changed hands in 2013 for $5.3 billion. The top disclosed transactions were the $5.2 billion acquisition of Invensys by Schneider Electric, followed by the $107 million acquisition of JouleX by Cisco, and the $11 million acquisition of Consert by Toshiba.

In terms of consolidation, 18 companies made multiple acquisitions. Since 2010, ABB and Schneider Electric were the most active with six acquisitions each. GE and Siemens made five acquisitions each, followed by EnerNOC with four.