A new report by Lux Research shows that VC investment in energy storage, EVs and smart grids is down, but that M&A activity is way up. As investment dollars dry up, bigger conglomerates are buying start-ups on clearance to fill a market need, beef up their customer lists, and acquire valuable IP.
“As VCs have withdrawn from the smart grid, energy storage and EV sectors, they’ve left a crowded landscape of stranded, early-stage ventures without any means to finance demonstration pilots or manufacturing scale-up,” said Steve Minnihan, a Lux Research Analyst and the report’s lead author, in the company’s press release. “Not surprisingly, well-capitalized competitors and corporate players have swept in, looking to acquire valuable intellectual property, manufacturing capabilities, and client lists at bargain valuations.”
Here’s the skinny:
Mergers & Acquisitions, Up: In the first six months of 2011, M&A deals totaled $2.42 billion for these three sectors – more than twice those made in all of 2010 ($1.2 billion). In all, EV, smart grid and energy storage markets saw 13 transactions 2010; in the first six months of 2011, alone, there were 12 major transactions.
Venture Capital Investments, Down: In the first half of 2010, VC funding reached an all-time, six-month high at $1.79 billion. In the 12 months from July 2010 to June 2011, funding totaled only $1.54 billion from VCs.
Here’s hoping that as big powerhouses buy up these niche players, corporate funding is used to propel these innovations to the next level via innovative pilots and deployments.
The report, titled “Bargain Shopping – Acquisitions are Crucial as VCs Pass-Over Grid, Storage and Vehicle Ventures,” is available at: https://portal.luxresearchinc.com/reporting/research/report_excerpt/8882.
Image courtesy of http://www.sxc.hu.