VC funding in smart grid sector flat in Q1 2013: Mercom Capital

Mercom Capital Group llc, a communications and consulting firm, released its report on funding, mergers and acquisitions (M&A) for the smart grid sector in the first quarter of 2013.

Venture capital (VC) funding in smart grid in Q1 2013, totaled $62 million (Rs 341 crore) in nine deals. The funding in Q1 was almost similar to that in the Q1 2012, when the same amount was raised by smart grid companies but in 10 deals. With the lone exception of home security and automation company, Alarm.com’s $136 million (Rs 748 crore) raise in Q32012, the pace of funding has remained largely unchanged for the past five quarters.

“After peaking in Q2 2010, VC investments in smart grid have slowed down considerably, and continue to amble along with no clear direction,” said Raj Prabhu, CEO of Mercom Capital Group. “Silver Spring Networks’ long awaited IPO was the lone highlight in an otherwise slow quarter,” he added.

The top five VC deals in Q12013 raised a total of $52 million (Rs 286 crore). The top two VC deals each raised $15 million (Rs 82.50 crore). Cylance, a cyber security products provider for the infrastructure industry, raised $15 million from Khosla Ventures and Fairhaven Capital in a Series A round. And Sentient Energy, an advanced grid monitoring solutions developer, raised $15 million in an undisclosed round from Foundation Capital.

That was followed by the $11.3 million (Rs 62.15 crore) raise by Utility Funding from Foresight Group. Xtreme Power raised $5.8 million (Rs 31.90 crore) by a group of investors including SAIL Capital Partners, Bessemer Venture Partners, Dow Chemical, Fluor, Dominion Power, Spring Ventures, BP, and Posco. Smarter Grid Solutions raised $4.8 million (Rs 26.40 crore) from Scottish Equity Partners, Scottish Investment Bank and the University of Strathclyde.

There were only four M&A transactions in Q1 2013. One of the transactions, Toshiba Corporation’s acquisition of privately-held energy management company Consert, was disclosed for a total of $11 million (Rs 60.50 crore). Last quarter, $22 million (Rs 121 crore) in M&A activity was disclosed in the same number of transactions.

Despite a slow quarter, the smart grid sector saw a rare IPO. Silver Spring Networks, a provider of smart grid products and services to utilities, raised $81 million (Rs 445.50 crore) by offering 4.75 million shares at $17 (Rs 935).