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VC Battery Energy Storage Start-Up Funding Almost Doubles, to $714MM, in 2017

Venture capital (VC) funding of battery energy storage companies almost doubled year-over-year in 2017. Battery energy storage start-ups raised $714 million in 30 deals from VC investment groups last year as compared to $365 million in 38 in 2016, according to Mercom Capital Group's “2017 Q4 and Annual Smart Grid, Battery Storage and Efficiency Funding and M&A Report.” 

Accounting for 56 percent of total 2017 VC battery energy storage investment, China's CITIC Securities, CDH Investment, National Venture Capital ponied up $400 million in China-based battery energy storage start-up Microvast. Downstream energy storage companies garnered the most VC funding last year, a total of $68 million. 

More broadly, VC investors plowed a combined $1.5 billion into battery storage, smart grid and energy efficiency start-ups in 2017, up 13 percent from $1.3 billion in 2016, by Mercom's count. Total 2017 VC smart grid funding came in at $422 million in 45 deals, up 8.5 percent from $389 million in 42 deals in 2016. VC funding for energy efficiency start-ups dropped a steep 27 percent year-over-year, from $528 million in 2016 to $384 million in 2017.

2017 VC Battery Energy Storage Investments

Including debt and public market transactions, total corporate VC funding for battery energy storage companies rose 65 percent year-over-year, from $540 million in 2016 to $890 million in 2017, Mercom highlights in a news release. 

Rounding out the top 5 VC battery storage investments for 2017, Battery Energy Storage Solutions raised $66 million, Foresee Power $65 million, Advanced Microgrid Solutions $34 million and Primus Power $32 million. 

In addition to investing $68 million in downstream energy storage companies, VC groups invested a total of $65 million in lithium-based battery energy storage companies last year, according to Mercom. Overall, 86 VC investors participated in battery energy storage deals in 2017 as compared to 62 in 2016. 

Turning to battery energy storage project funding, VC investors plowed $446 million into projects last year. That's a sharp, 46 percent drop from $820 million in 2016.

Furthermore, nine battery storage project funding deals totaling nearly $2.1 billion were announced in 2017. That was much, much greater than the $33 million in four deals Mercom tracked in 2016. 

Finally, Mercom tracked six battery energy storage mergers and acquisitions (M&A) for 2017. Transaction amounts were announced for just two. Mercom tracked 11 battery energy storage M&A transaction in 2016. Dollar amounts were announced for just three.

2017 VC Smart Grid Funding

VC investments in the smart grid sector totaled $422 million in 45 deals in 2017. That compares to $389 million raised in 42 for 2016, according to Mercom's latest market research report. That rises to $1.2 billion when smart grid debt and public market funding is included, a big, 96 percent jump from $613 million in 2016. 

Topping 2017's VC smart grid sector investments was Chargepoint raising $82 million and $43 million in two separate deals. Actility raised $75 million, Brilliant raised $21 million, and Particle and Urjanet each raided $20 million of VC capital.

“Smart Charging of plug-in hybrid electric vehicle (PHEV), vehicle-to-grid (V2G) companies, had the largest share of VC funding in 2017 with $155 million in 10 deals, followed by Demand Response companies with $94 million in four deals,” Mercom highlights.

2017 VC Energy Efficiency Funding

VC funding for energy efficiency start-ups fell from $528 million in 33 deals in 2016 to $384 million in 38 in 2017. Including debt and public market financing, VC-funded energy efficiency companies raised a total of $3.3 for the year, down 13 percent from 2016. 

View raised $100 million, Kinestral Technologies raised $65 million, RENEW Energy Partners $40 million, Power Survey and Equipment $24 million and Stock Lighting $16 million to make up the ranks of 2017's Top 5 VC energy efficiency sector investments. 

“Efficient Home/Building companies captured the most funding with $172 million in five deals in 2017. A total of 51 investors participated in funding deals in 2017 compared to 72 investors in 2016. Energy Impact Partners was the most active investor in 2017,” Mercom writes.

Debt and public market financing by VC-funded energy efficiency companies totaled $2.9 billion in 16 deals in 2017, down 9.4 percent, from $3.2 billion in 16 deals in 2016. 

In addition, seven PACE (Property Accessed Clean Energy) financing deals took place, bringing in more than $1.6 billion. That compares to $2.3 billion in 12 deals in 2016.

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