By Kari Williamson
From the high of US$1.79 billion in venture funding in the first half of 2010, funding for storage, smart grid and electric vehicle companies has dwindled to only US$1.54bn in the following 12 months – 72% of which was channelled into Series D and later-stage rounds.
M&A transactions totalled US$2.42bn in all three sectors during the first half of 2011 – more than double the US$1.20bn exchanged during all of 2010.
Two deals comprised most activity in each year: ABB’s acquisition of Ventyx in 2010 (US$1bn), and Toshiba’s acquisition of Landis+Gyr in 2011 (US$2.3bn). All told, the electric vehicle, smart grid, and energy storage sectors saw a total of 13 transactions in 2010, and another 12 during the first half of this year.
“As VCs have withdrawn from the smart grid, energy storage and EV sectors, they’ve left a crowded landscape of stranded, early-stage ventures without any means to finance demonstration pilots or manufacturing scale-up,” says Steve Minnihan, a Lux Research Analyst and the report’s lead author.
“Not surprisingly, well-capitalised competitors and corporate players have swept in, looking to acquire valuable intellectual property, manufacturing capabilities, and client lists at bargain valuations.”
- Seed funding and Series A deals have virtually disappeared for smart grid, energy storage, and EV start-ups as VCs focus their efforts on maturing companies in their portfolio rather than seeking new opportunities;
- Companies that received no outside funding accounted for 44% of all M&A transactions, while companies that completed a Series C round or later account for only 28% of acquisitions. Overall, acquirers in the smart-grid space are favouring low-value acquisitions of small companies with a technology or product that supplements their existing product portfolio and has some proven commercial adoption; and
- The automotive and fuel cell segments combined represented 66% of all VC spending in 2011. Automotive continues to thrive thanks to six vehicle start-ups that have claimed US$664 million since the beginning of 2010. Meanwhile, fuel cell companies raised US$371m over 39 transactions since the start of 2010.