VC funding for Battery Energy Storage Companies Was up 78% With $661 Million in Q3
Smart grid VC funding soared 231% to $643 million
October 21, 2020
Global corporate funding (including venture capital funding, public market, and debt financing) for the battery storage, smart grid, and energy efficiency sectors was up 165% in the third quarter of 2020 (Q3 2020) at about $3.2 billion, according to Mercom Capital Group’s latest report.
This was a steep increase from the previous quarter, which saw $1.2 billion in funding. It was also 777% higher than the same period last year, which only saw $365 million raised through 20 deals.
The report revealed that despite the ongoing COVID-19 crisis, total corporate funding for the battery storage, smart grid, and energy efficiency sectors in the first nine months (9M 2020) stood at $4.7 billion. This was a 75% increase from the same period last year, which saw $2.7 billion in funding.
Corporate funding for battery storage companies in 9M 2020 was up 62% from the same period last year. Companies raised $3.5 billion through 35 deals, compared to $2.2 billion raised through 32 deals previously. Corporate funding raised during Q3 2020 stood at $2.8 billion through 16 deals. This was an increase from the previous quarter’s $472 million raised through 10 deals.
On the other hand, Venture Capital (VC) funding during Q3 2020 was up 78% at $661 million raised through seven deals from the $372 million raised from eight deals in the previous quarter. The report cited Northvolt’s $600 million equity raise as the primary reason for the jump.
In 9M 2020, funding was down 25% at $1.2 billion raised through 21 deals compared with the $1.6 billion through 25 deals in the same period last year.
The report said that the top five VC funding deals in 9M 2020 included $600 million raised by Northvolt, $200 million raised by QuantumScape, $100 million raised by QuantumScape, $71 million by Demand Power Group, and $46 million by Highview Power. In all, 28 VC investors participated in battery storage funding in Q3 2020, the report added.
Battery storage technology companies also raised $2.1 billion in debt and public market financing during Q3 2020. In 9M 2020, companies raised $2.3 billion through 14 deals.
Q3 2020 also saw three mergers and acquisition (M&A) transactions in the sector, down from four each in the previous quarter and the same quarter last year. There were 11 M&A transactions in 9M 2020.
There were four project M&A transactions in the third quarter of 2020, up from four in the previous quarter and the same quarter last year. In 9M 2020, there were 15 transactions – up from eight in 9M 2019.
Smart Grid VC funding stood at $368 million raised through 11 deals in Q3 2020, compared to the previous quarter’s $194 million through 14 deals. This was much higher compared to the meager $39 million raised through six deals in Q3 2019. 9M 2020 witnessed a 231% climb to $643 million raised through 32 deals from $194 million raised through 28 deals.
The five largest smart grid VC funding deals in 9M 2020 included $127 million raised by ChargePoint, $125 million by Star Charge, $60 million raised by SmartRent, $53 million by Probus Smart Things, and $43 million by Smart Wires.
In 9M 2020, announced debt and public market financing for Smart Grid companies stood at $10 million raised through three deals compared to $45 million raised from two deals in 9M 2019.
There were 12 smart grid M&A transactions in Q3 2020 compared to one in Q2 2020 and five in Q3 2019. In the first nine months of 2020, there were 18 transactions, compared to 23 in 9M 2019.
Energy Efficiency technology companies raised about $48 million through four deals in Q3 2020 compared to $40 million from four deals in the previous quarter and $61 million from three deals in Q3 2019.
9M 2020 saw $95 million raised through 11 deals, down from $268 million from eight deals in the same period last year.
The top VC funding deals in 9M 2020 included $29 million raised by Palmetto, $18 million by Juganu, $12 million by BrainBox AI, $12 million raised by Virtual Power Systems, and $10 million by SmartAC.com.
Announced debt and public market financing in 9M 2020 stood at $500 million from one deal, up from $56 million raised in two deals in the same period last year.
In terms of M&A transactions involving energy efficiency companies, there were three deals in Q3 2020 compared to none in the previous quarter and one in the same quarter last year. In 9M 2020, there were four such M&A transactions, down from nine in the same period last year.
There were three VC funding deals involving Indian companies. On the battery storage front, Grinntech, a startup that develops and manufactures lithium-ion batteries for electric vehicles, raised $2 million from four investors.
Meanwhile, on the smart grid segment, early-stage VC fund house Unicorn India Ventures announced a $53.4 million investment in Probus Smart Things, a smart grid automation startup. Separately, Inflection Point Ventures, an active angel platform, invested an undisclosed amount in Eden Smart Homes, an IoT (internet of things) startup.
In July, Mercom reported that global VC funding for battery storage, smart grid, and efficiency companies in the first half of 2020 was down 51% at $858 million from $1.8 billion in 1H 2019.
Recently, a joint study by the European Patent Office and the International Energy Agency showed that Asian consumer electronics players and carmakers are driving research and development in the battery and energy storage arena.
Image credit: Ysc usc, CC BY (4.0)
Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.