VC funding in solar off to a slow start in Q1

Richa Mishra New Delhi | Updated on March 12, 2018

Venture capital funding in the solar sector globally was off to a slow start in the first quarter of 2012.

VC funding for the quarter came to $329 million in 34 deals, the lowest since fourth quarter of 2010. This was brought out in a report on funding and mergers and acquisition activity for the sector during the first quarter of 2012 released by Mercom Capital Group llc, a global clean energy communications and consulting firm.

“While VCs' interest in the solar sector remains strong, their appetite for risk appears to be lower as the average VC funding amount in first quarter was $10 million, compared to $18 million in 2011,” said Mr Raj Prabhu, Managing Partner at Mercom Capital Group.

“To add to the current overcapacity problems, policy changes and lower tariff announcements in some of the largest solar markets, such as Germany and Italy, will all contribute to an uncertain 2012.

“We can expect a more cautious approach to investing in the solar sector this year.”

However, VC investors are still very active in the sector with a record 34 deals funded, the highest ever recorded in the solar industry, the report said.

There was strong M&A activity in the solar sector totalling $5 billion in 15 transactions, however, only four of these transactions disclosed details, the report said.

The spike in M&A amounts was mainly due to the $4.7 billion acquisition of Solutia, a performance and specialty chemicals company with products in PV encapsulants, performance films for photovoltaic and CSP products, and heat transfer fluids for CSP plants, by Eastman Chemicals Company.

The first quarter of 2012 also saw 11 new cleantech and solar-focused investment funds announced committing $5.7 billion. A significant positive event for the solar sector in the first quarter was the initial public offering of the micro-inverter company Enphase Energy, which raised $62 million as part of its offering, the report says.

The top five funding deals made up about 60 per cent of the total funding in the first quarter, led by $81 million by SolarCity, a pioneer in the solar lease model.

Three of the five top companies to receive funding also included MiaSolé, Nanosolar and AQT Solar, all CIGS (Copper indium gallium (di)selenide technology) companies, raising $94 million in total. Maintaining last year’s trend, with half a billion dollars raised in 2011, CIGS companies continued to receive the most amount of VC funding as a technology group.


Published on April 13, 2012

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