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October 22, 2012

Smart Grid VC Funding Finds a Pulse in 3Q 2012 with $238 Million Invested



The rise in funding was due mostly to $136 million raised by Alarm.com (News - Alert), a wireless security and home automation company based in Virginia that received funding from ABS Capital Partners, Equis Capital Partners, NJTC Venture Fund, and Technology Crossover Ventures.

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VC funding in the last three quarters had been relatively weak—with $66 million in ten deals in Q4 2011; $62 million in ten deals in Q1 2012; and $66 million in nine deals in Q2 2012—whereas VC funding, even without the Alarm.com transaction, exceeded $100 million this quarter. 

“The Alarm.com funding deal and the acquisition of Vivint [a home automation company based in Utah] for $2.2 billion by Blackstone Group [are] part of a growing trend where home security companies have expanded into … automation,” said Raj Prabhu, Managing Partner at Mercom Capital Group. “We expect to see more transactions in this niche, where security, cable and telecom companies expand their offerings to cover the whole ‘connected or digital’ home services [spectrum], which would include everything from communication and automation services to solar installations.” 

Apart from Vivint and Alarm.com, other companies in the home security/home automation business that have been involved in funding and M&A deals in the last few years include AlertMe, Intamax Systems, Control4, iControl Networks (News - Alert), Home Automation, APX Alarm and Xanboo. 

The other top deals for the quarter included the following:

·         GridPoint, an energy management company raised $23.3 million (investors undisclosed);

·         Viridity Energy, a demand side management solutions company, raised $15 million from Mitsui;

·         Space-Time Insight, a geospatial information systems company, raised $14 million from EnerTech Capital, Novus Energy Partners, ClearSky Power & Technology Fund, Opus Capital Ventures and Start Up Farms International; and

·         SIGFOX, a wireless connectivity solutions provider for smart metering, building intelligence and M2M, among other markets using ultra narrow band technology, raised $12.6 million from Intel Capital (News - Alert), Elaia Partners, Partech Ventures International and iXO Private Equity.        

M&A Activity

Merger & Acquisition (M&A) activity in Q3 2012 totaled $2.2 billion in five transactions. Top M&A transactions were the $2 billion acquisition of Vivint, and the $183 million acquisition of smart grid and automation solutions provider ZIV Group, based in Spain, by electrical transmission and distribution equipment company Crompton Greaves.

“We will also be watching for strategic M&As in this area as companies look to add service and technologies needed to compete,” added Prabhu. 

Finally, over $1.9 billion in new funds with a cleantech and smart grid focus was announced in Q3 2012. For a complete list of Q3 2012 transactions in the smart grid sector, click here




Edited by Allison Boccamazzo
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