By Baishakhi Dutta
Mercom Capital Group recently released its report on funding as well as the mergers and acquisitions (M&A) activity for the global and Indian battery storage, smart grid and energy efficiency sectors for the second quarter and first half of 2017. Here are the key excerpts…
Global investments in battery storage are on the rise
Globally, venture capital (VC) funding (including private equity and corporate venture capital) for battery storage companies jumped in Q2 2017 to US$ 422 million covering 10 deals compared to US$ 58 million for eight deals in Q1 2017 due to a very large funding deal. Year-over-year (YoY) funding was also higher compared to the US$ 125 million raised in Q2 2016 from 10 deals. In the first half (1H) of 2017, US$ 480 million was raised in 18 deals compared to the US$ 179 raised in 20 deals in 1H of 2016.
The top VC funded battery storage companies in Q2 2017, globally, were Microvast Power, which raised US$ 400 million from CITIC Securities, CDH Investment, National Venture Capital, and others; Vionx Energy, which received US$ 12.75; and Moixa Technology, which raised US$ 3.2 million in funding from the Greater Manchester Combined Authority, Tokyo Electric Power Company (TEPCO) and First Imagine! Ventures.
Eleven investors participated in battery storage funding in Q2 2017, with lithium-based battery companies raising the most.
Some of the Indian battery storage companies that have received funding include:
- ION Energy, a stealth startup building a layer of infrastructure for energy storage systems, raised an undisclosed amount of angel funding from a group of investors including Sushil Jiwarajka (chairman of OMC Power and founder of Nippo Batteries), Aakrit Vaish and Swapan Rajdev (founders of Haptik), and other individual investors.
- Tessol, a provider of thermal energy storage solutions for cold chains and logistics, raised an undisclosed amount of Series A funding from Infuse Ventures and Ankur Capital.
- Greenvision Technologies, a manufacturer of lead-acid batteries, raised US$ 8 million in funding from Singapore-based venture fund, Vintage Energy and Resources.
There were seven debt and public market financing deals in battery storage in Q2 2017 totalling US$ 107 million compared to US$ 22 million in two deals in Q1 2017. In 1H 2017, US$ 129 million were raised in nine such deals, compared to three deals bringing in US$ 69 million in 1H 2016.
There were three M&A transactions involving battery storage companies in Q2 2017. In Q1 2017, there was just one M&A transaction. So, in the first half of 2017, there were four such transactions (one disclosed) compared to six transactions in 1H 2016 (two disclosed).
Advice to new players in the Indian market
Raj Prabhu, CEO & co-founder, Mercom Capital Group
“New players have to first figure out a cohesive strategy and focus on what specific product they are going to sell. Too many companies want to sell everything. Also, if you want to be a battery supplier, you need to invest in developing technology. Most companies in India wait for technology to be developed abroad, which they can implement in a cost-effective way without doing any R&D. Most of the time this does not work. If your product differentiation is just related to cost, then chances are you will never be able to compete with the Chinese. You have to think long-term, specialise in a core area and raise a lot of capital to succeed in this market.”
Global funding for smart grids witnesses a slowdown
Global VC funding for smart grid companies saw a fall in Q2 2017. It totalled US$ 139 million in eight deals compared to US$ 164 million in 14 deals in Q1 2017. There was a YoY fall too, as US$ 222 million had been raised from 15 deals in Q2 2016. In the half-yearly comparison, US$ 304 million was raised in 22 deals in 1H 2017 compared to US$ 331 million raised in 29 deals in 1H 2016. So there was a slight fall here too.
The top VC funded smart grid companies in 2017 include Actility, which secured US$ 75 million from Creadev, Bosch, Inmarsat, Idinvest, Bpifrance, Ginko Ventures, KPN, Orange Digital Ventures, Swisscom and Foxconn. ChargePoint raised US$ 43 million from Siemens, FreeWire Technologies received US$ 7.6 million; and Enervalis secured US$ 4.8 million from LRM, Nuhma and ABB.
Seventeen investors participated in smart grid VC funding rounds in Q2 2017. There was one debt and public market financing deal in the smart grid domain in Q2 2017, totalling US$ 9 million compared to no deals in Q1 2017. In 1H 2017, only US$ 9 million were raised in one deal compared to the US$ 217 million raised in three deals in 1H 2016.
There were six smart grid M&A transactions in Q2 2017 compared to seven transactions in Q1 2017. So, in the first half of 2017, there were 13 transactions (three disclosed) compared to five transactions (two disclosed) in 1H 2016.
VC funding in energy efficiency technology companies fell significantly to US$ 29 million in six deals in Q2 2017 compared to the US$ 213 million in 14 deals in Q1 2017 and US$ 86 million in nine deals in Q2 2016. In the half-yearly comparison, US$ 242 million was raised in 20 deals in 1H 2017 compared to US$ 297 million raised in 23 deals in 1H 2016.
The top energy efficiency VC deals included US$ 15 million raised by CIMCON Lighting from Energy Impact Partners and US$ 5 million raised by Tendril Networks. OptiWatti raised US$ 4 million from Taaleri Kiertotalous and Butterfly Ventures, and Illumitex raised US$ 4 million from WP Global Partners and NEA.
Six investors participated in VC funding in Q2 2017. Within the sector, efficient lighting companies brought in the most funding.
Debt and public market financing for energy efficient companies rebounded to US$ 1.4 billion in six deals in Q2 2017 compared to US$ 301 million in three deals in Q1 2017. In 1H 2017, US$ 1.7 billion was raised in nine deals compared to US$ 2 billion raised in the same number of deals in 1H 2016.
There was one M&A transaction in the energy efficiency sector in Q2 2017 compared to four in Q1 2017. So, in the first half of 2017, there were five transactions (two disclosed) compared to 10 transactions in 1H 2016 (four disclosed).
(Source: Original report published by Mercom Capital Group.)