Since 2000, solar technology has attracted enthusiastic support from venture capitalists (VCs), who have cumulatively invested over $7.5 billion. However, 2009 was a harrowing year for the solar industry and for its VC backers. In a recent Lux report, we observed that VC funding for solar firms had dropped 55% in 2009 to $1.52 billion. Deal sizes were down across the spectrum of products and technologies. The exception was late-stage deals (Series D and later).
For solar firms of every size, 2009 was not just a difficult year, it was an outright fight for survival. As we outlined in recent reports (e.g. Finding the Solar Market’s Nadir and Solar’s Impending Shakeout: Europe Loses Leadership as China Rises – client registration required) solar companies looking to “break out” in 2009 saw their plans delayed or squashed, while early start-ups unable to raise cash were forced to hunker down to wait out the storm. In reviewing VC funding by stage, M&A activity, and IPO data, we found that the overall deal value of early-stage deals fell more than 65% across Series A, B, and C investments. However, a select few companies – including Amonix, Solyndra, Siliken, and Innovalight – pulled in large sums during D series and subsequent rounds. Just as in 2008, select investors in these firms built on earlier investments, racing time and start-up costs en route to fully scaled production.
Consequently, late-stage rounds ballooned in 2009 as investors “doubled down” on their investments. In 2009, Series D or later investments garnered 43% of the total deal value, up from just 11% in 2008. Moving forward, the largest solar VC deals will be directed at late-stage rounds for cell and module companies as investors concentrate on their existing portfolios.
Source: Lux Research report “2009 Solar Financing: Double or Nothing.”
facebook 
twitter 
email 
linkedin