Venture Capital Rebounds for Smart Grid in Q3

Venture capital investments in smart grid companies rebounded in the third quarter of 2012, spurred in large part by funding for companies offering home energy management platforms and services.

$238 million was invested in 12 deals, according to Mercom Capital Group. Alarm.com raised about half of that in a $136 million deal. The company develops home automation services including energy management.

But even without that deal, VC funding in Q3 was much stronger than earlier this year. Just $62 million (10 deals) was raised in the first quarter and $66 million (9 deals) in the second quarter.

"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 which would include everything from communication and automation services to solar installations," says Raj Prabhu, managing partner at Mercom Capital Group.

Top five smart grid funding deals for Q3:

Alarm.com ($136 million): Home energy management
(investors: ABS Capital Partners, Equis Capital Partners, NJTC Venture Fund, Technology Crossover Ventures)

GridPoint ($23.2 million): Energy Management
(undisclosed investors)

Viridity Energy ($15 million): Demand-side Management
(Mitsui)

Space-Time Insight ($14 million): Geospatial Information Systems (EnerTech Capital, Novus Energy Partners, ClearSky Power & Technology Fund, Opus Capital Ventures and Start Up Farms International)

SIGFOX ($12.6 million): Wireless Connectivity for Smart Meters and Building Intelligence (Intel Capital, Elaia Partners, Partech Ventures International and iXO Private Equity)

The biggest smart grid merger of the third quarter was also driven by the potential for home energy management – Blackstone’s $2 billion buyout of home automation services company Vivant.