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Mercom: Q1 2016 VC funding for storage companies drops by half compared to previous quarter

Smart Grid VC Funding Q1 2015-Q1 2016, as found in Mercom report. Image: Mercom

Mercom Capital Group’s latest report revealed that venture capital (VC) funding for smart grid, storage and energy efficiency companies totalled US$375 million in Q1 2016. The Texas-based clean energy communications and consulting firm released its quarterly run-down on financing and M&A activity within the storage, smart grid and energy efficiency space.

On the battery and storage front, year-over-year funding was lower in comparison with the US$69 million in seven deals in the first quarter of last year. In fact, VC funding for battery and storage companies dropped 50% from the US$108 million in eight deals in Q4 2015. San Francisco-headquartered Sunverge Energy was a top performer in this quarter, raising US$36.5 million in VC from AGL Energy, SB China Capital, Siemens Venture Capital and Total Energy Ventures International.

As well as manufacturing energy storage, Sunverge optimises the value of renewable energy by leveraging the practical advantages of distributed generation and software-as-a-service. The company also made headlines in the storage field earlier this year when Australia’s biggest utility AGL partnered with it, investing US$20 million to fund climate change initiatives.

The partnership marked a significant opportunity for the creation of an integrated battery storage solution for the residential market in Australia. Fellow Californian computer software company Geli was also among the top VC funded companies in this quarter, raising US$3 million.

The other top VC funded battery and storage companies included VionX Energy, who raised US$5 million. The vanadium flow battery company kept up the momentum; also being one of the top five companies to receive big investment in the last quarter, with US$58 million.

Skeleton Technologies, a leading manufacturer of ultracapacitors in Europe, was the third highest funded storage company in Q1 2016. In February the Estonian company secured €2.5 million (US$2.83 million) from Europe’s biggest research and innovation programme to help the manufacturer double its graphene production performance. Similarly, New York-based battery developer Voltaiq secured a top spot, raising US$1.6 million in Q1 2016.

Green Charge Networks, who was recently recognised for sustainably combining energy storage with renewables by smart grid media outlets, raised US$20 million for non-recourse project funding for energy storage systems. The energy storage provider, who has offices in California, New York and San Diego, has doubled both its customer and employee base since 2015.

Overall in this quarter eight investors were engaged in the energy storage funding. Debt and public financing deals brought in US$29 million, falling slightly from the US$32 million raised through three deals in Q4 2015. M&A activity stayed the same as last quarter with two transactions.

Energy efficiency companies received more funding than their storage counterparts in this quarter, bringing in a total of US$211 million in VC funding across 14 deals, as compared to storage companies’ US$54 million in 10 deals. However, in 2015, energy storage system companies attracted most VC funding. The standout energy efficient company this time around was the Angelo Group’s Renew Financial with US$70 million worth of funds. Figree Financing and Ygrene Energy Fund both raised US$30 million. The sector was busy this quarter with 31 investors in total participating in the VC funding, with LL Funds involved in two deals.

Tags: investment, funding, debt and public market financing, venture capital, mercom capital