Smart grid sector sees 30% rise in VC funding Q3: Mercom Capital

Total corporate funding in sector stands at Rs 786.90 crore ($129 million), including Rs 390.40 crore ($64 million) raised through IPO

Venture capital (VC) funding in the smart grid sector rose 30% in the third quarter (Q3) of 2013 at Rs 396.50 crore ($65 million). This amount was invested in 12 deals compared to Rs 305 crore ($50 million) invested in 10 deals in the second quarter (Q2).

VC funding in the sector has remained flat at this level over the last eight quarters, with the exception of Q32012 when Rs 1,428 crore ($238 million) was raised.

Total corporate funding in the sector stood at Rs 786.90 crore ($129 million), including Rs 390.40 crore ($64 million) raised through an IPO.

“Funding was slightly higher this quarter. We also saw a rare IPO also this quarter,” said Raj Prabhu, CEO of Mercom Capital Group. Mercom Capital Group, llc, is a global clean energy communications and consulting firm. It released its report on funding and mergers and acquisitions (M&A) activity in the smart grid sector in the third quarter of 2013.

 
The top five VC deals were led by Space-Time Insight, which raised Rs 122 crore ($20 million) from London-based private equity fund Zouk Capital. It joined current investors Opus Capital Ventures, EnerTech Capital and Novus Energy Partners.

On-Ramp Wireless raised Rs 91.5 crore ($15 million) from new investor Enbridge along with existing investors Third Wave Ventures and Energy Technology Ventures. This brings the total amount raised in its Series C round to Rs 189.10 crore ($31 million).

Varentec raised Rs 48.8 crore ($8 million) from Bill Gates and Khosla Ventures. This was a new addition to Bill Gates’ collection of energy investments. Bidgely raised Rs 30.5 crore ($5 million) also from Khosla Ventures and WaterSmart raised Rs 27.45 crore ($4.5 million) from Physic Ventures, Draper Fisher Jurvetson, Apsara Capital and The Westly Group.

 
Like the previous quarter, home and building automation companies received the highest amount of funding at Rs 219.60 crore ($36 million) in seven deals followed by grid optimisation companies with Rs 122 crore ($20 million) in one deal.
 
There were four M&A transactions in Q3. Only one transaction, Schneider Electric’s acquisition of Invensys for Rs 31, 873 crore ($5.2 billion), was disclosed. This is Schneider Electric’s sixth smart grid acquisition.
 
The third quarter also saw a successful exit in the IPO of Control4, a provider of automation and control solutions for the connected home.