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Slump in solar VC investments Q1 2013

According to reports, the slump in global venture capital (VC) investments in the solar sector, which started in Q3 2012, continued, dipping to $126 million in 26 deals in Q1 2013, compared to $220 million in 27 deals in the previous quarter, according to Mercom Capital Group, a global clean energy consulting firm.

This is the second lowest quarter for VC funding since 2008. In total, downstream companies, mostly solar lease companies, raised $75 million in eight deals, followed by a thin film with $25 million in six deals.

Downstream companies received the most VC funding of all categories this quarter,” said Raj Prabhu, CEO, Mercom Capital Group, while adding: “After being burned by solar technology investments, especially thin film, we are finally seeing VC investments shift away from technologies and towards downstream/lease companies that are benefiting from record low panel prices.”

The top five VC funding deals in Q1 2013 included $30 million raised by OneRoof Energy from Hanwha, followed by $28 million raised by Sungevity from five investors that included Brightpath Capital Partners, Lowe’s, Vision Ridge Partners, Craton Equity Partners, and Eastern Sun Capital Partners.

Rounding out the Top 5 were eSolar, a designer and developer of CSP solar projects now integrating molten salt storage technology, which raised $12.8 million; Crystalsol, a developer of flexible thin film technology, with $11 million raised from Conor Venture Partners, Arax Capital Partners, and Energy Future Invest; Goal Zero, a provider of portable solar power systems which raised $7 million from Mercato Partners and PsomasFMG, a solar system provider, which also raised $7 million from MTI Partners.

M&A activity in the first quarter amounted to $306 million in 15 transactions. The largest disclosed M&A transaction by dollar amount in the first quarter was solar cell manufacturer Goldpoly New Energy Holdings’ acquisition of power plant developer China Merchants New Energy Holdings in a non-cash transaction valued at $273 million.

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