Smart grid VC investment took a big jump in the third quarter of 2012, reversing some pretty meager figures for the past few years. But the lion’s share of that jump in investment -- as well as a big chunk of the merger and acquisition activity in the third quarter -- was directed at startups with technology that goes in the home, rather than on the grid.
Those are some of the takeaways from Mercom Capital Group’s third-quarter smart grid funding report released Monday. Overall investment grew to $238 million in the third quarter of 2012, an impressive rise from the previous quarter’s $66 million and $62 million in the first quarter of this year. In fact, it comes close to matching the good old days of 2010, when smart grid startups brought in $305 million in the second quarter of 2010.
But more than half of that third-quarter boost was made up of Alarm.com’s $136 million round in July, aimed at expanding the startup’s whole-home connectivity technology suite, now installed in 1 million homes and counting. Alarm.com has a partnership with Verizon Wireless to link security cameras, remote-controlled door locks, motion-sensor lights and other such home devices in a wireless network connected to Verizon’s home automation management platform -- one of several telecommunications-driven efforts to colonize the home with smart devices.
Likewise, the vast majority of the third quarter’s $2.2 billion in M&A activity consisted of one deal: Blackstone Group’s $2 billion purchase of Vivint. The Provo, Utah-based home security and automation vendor has been branching into third-party-financed residential solar as well, and counted about 675,000 customers as of this summer.
These aren’t precisely smart grid businesses, although it’s possible for utilities to leverage home area networks like these for smart grid purposes in the future. Still, investments like these are no doubt welcome by the dozens of startups struggling to grow a market for home energy management and automation technologies, which still exist in only a tiny fraction of the homes out there. Residential solar in particular is something utilities would like to connect to, since it can either destabilize or support the grid, depending on how its intermittent power flows are managed.
Other smart grid fundings of note in the third quarter include $23.3 million for GridPoint, a startup we haven’t heard from for awhile. The Arlington, Va.-based company has raised about $270 million from investors and bought a string of companies in the vehicle-to-grid, home energy management and commercial energy efficiency lines. Then, in 2010, it replaced its founding CEO Peter Corsell and laid off staff amidst reports that the company hadn’t managed to capitalize on its sprawling portfolio.
Now, GridPoint CEO John Spirtos tells The Washington Post that the company has now focused squarely on building energy efficiency, which is believed to be its main source of ongoing business via its 2009 acquisition of ADMMicro. Last year, the company announced it was doing a 436-kilowatt solar installation in Texas as well.
Other third-quarter smart grid investments include $15 million for Viridity Energy from Mitsui; $14 million for Space-Time Insight from EnerTech, Novus Energy Partners and others; and €10 million ($12.6 million) for French wireless technology startup SIGFOX from Intel Capital, Partech Ventures and iXO Private Equity. The other major M&A deal reported by Mercom was the €150 million ($183 million) acquisition of smart grid and automation solutions provider ZIV Group by electrical equipment company Crompton Greaves.