Energy Efficiency Heats up with Healthy M&A and IPO Activity this Summer
The Energy Efficiency sector has been home to many new entrants of late, all presumably looking to capitalize on the buzz surrounding energy management platforms, IoT-enabled devices, and decreasing LED costs. As the market gets crowded, the industry has waited to see who will emerge as the winners and who will fall short. This summer, the energy efficiency sector began to show signs of maturation with a number of exits and a wave of acquisitions from large corporates.
Growth equity rounds in efficiency financing platforms – a huge enabler of implementing building retrofits – and home energy management and automation systems, such as Next Step Living and tado, are continuing to move the sector forward. Following two IPOs from Lucibel and Lumenpulse in 2Q14, lighting manufacturing and controls have also been a driving force for energy efficiency, garnering five growth equity deals totaling $132M since the beginning of this year. Just yesterday, lighting controls company, Enlighted, received a $20M growth equity investment from prominent investors such as Draper Nexus Ventures and others. We will likely continue to see new start-ups entering the ever-growing energy management and lighting industries as successful exits and continued investor interest bolster entrepreneurs’ aspirations and innovation.
Corporate partnerships have also been active in the energy efficiency space lately, in addition to venture investment and acquisitions. Best Buy recently partnered with SmartHome Ventures to develop home automation products and services to be sold in Best Buy stores under the brand name Peq. SmartHome Ventures offers a software platform that connects smart home devices, including home electronics and HVAC systems. The company recently received a Series A investment from Kansas City-based venture capital and private equity firm, OpenAir Equity Partners. Best Buy’s shift into the home automation space is not a new trend – competitors including Staples, Lowes and Apple have already begun introducing home energy management platforms to their customers.
To dig deeper into investment trends in 2Q14 within the Energy Efficiency sector, check out our most recent edition of our Quarterly Innovation Monitor report.