Solar Venture Capital Funding Off To Strong Start In First Quarter

Venture capital (VC) funding in the solar sector posted positive results for the first quarter of 2011 (Q1'11), coming in at $658 million in 25 deals – compared to $238 million in the previous quarter and $311 million in the first quarter of last year.

According to a report from Mercom Capital Group LLC, a global clean energy communications and consulting firm, the trend was similar in the mergers and acquisitions (M&A) space, with activity amounting to $1.4 billion in 18 transactions for Q1'11, compared to $266 million in the fourth quarter of 2010 (Q4'10) and $909 million in the first quarter of (Q1'10). Debt and other types of funding activities came in at $9.7 billion in Q1'11 with 15 deals.

‘Looking at the first-quarter funding activities, it is clear that VC investors' appetite for solar has not gone away,’ says Raj Prabhu, managing partner at Mercom Capital Group. ‘In fact, this was the best VC funding quarter since Q2 of 2010 ($948 million) and the second best quarter since Q4 of 2008.’

The top five funding deals made up for almost 70% of the total funding in this quarter, led by a $201 million Series E raise by BrightSource Energy. MiaSole raised $106 million in Series F funding; Alta Devices, raised $72 million in a Series C, Solopower raised $51.6 million in a Series E and Kiran Energy raised $30 million in a Series A.

Thin-film companies attracted the most funding, with $283 million raised in seven deals, the report adds. Copper indium gallium selenide was the most popular technology within thin films, accounting for $196 million in four deals. Concentrating solar power companies raised $212 million in three deals, followed by $84 million raised by solar downstream companies in six deals.

There were 55 different VC investors that participated in 24 disclosed deals, according to Mercom Capital. VC firms that recorded multiple rounds included Crosslink Capital, Vantage Point Venture Partners, Convexa Capital Ventures, Hudson Clean Energy Partners and Kleiner Perkins Caufield and Byers.

In continuing with last year's trend, VC arms of companies remained active in the solar sector. These investors included Alstom, BP, GE, Chevron, Dow Chemical, Intel and Hanwha. California State Teachers' Retirement System, a pension fund, also invested in the sector this quarter.

Among countries, the U.S. was dominant in VC funding, accounting for 87% of all VC funding in the first quarter; 89% of all VC funds raised by solar companies in 2010 were also from the U.S.Â

Out of $9.8 billion announced in debt and other funding, $7.6 billion came in from the Bank of China for Jinko Solar. This is a continuing trend from the last year, when Chinese government banks provided a total of approximately $34 billion in credit to Chinese solar manufacturers, the report says. There was $2.1 billion in non-Chinese debt transactions, showing significant improvement in the credit markets in Q1'11 – and only $2.2 billion in non-Chinese debt and other funding in all of 2010.

A complete list of Q1'11 transactions in the solar sector is available here.

SOURCE: Mercom Capital Group


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