Spectacular failures have made the solar space a no-mans land for investment. Early stage deals continue raising the spectre of a solar financing crunch down the road. Solar financing and installation is the one bright spot within the industry.

Investment activity into the solar industry fell to its lowest level in 5 years in Q1 2013 with just 18 investments. The $269 million haul by solar companies was the second lowest tally of the last five years (the lowest was seen in Q2 2009 at $222 million).  Q1′s precipitous drop also was the first quarter in the last five years with less than 25 financings to the solar space. Note: this includes investments of all types ranging from angel investment to VC to private equity.

This decline should come as no surprise as sentiment to the space has been poisoned (rightfully so) because of several failures and asset sales in the space which seem to have started with Solynda’s high profile failure.  While the list of the less than stellar exits is long, here is a partial list of some of the more spectacular private company solar exits/mishaps in just the last year:

  • Twin Creeks Technologies – The firm raised over $90 million from the likes of Benchmark Capital, DAG Ventures, Crosslink Capital and Artis  Capital Management.  In November 2012, GT Advanced Technologies acquired the intellectual property of Twin Creeks for what was rumored to be $10 million.
  • MiaSole – After having raised several hundred million dollars from the likes of Kleiner Perkins, VantagePoint Capital Partners and Bessemer Venture Partners among many many others, MiaSole sold to Beijing-based Hanergy Holding Corp for $30 million.
  • Abound Solar – Abound, like Solyndra, was another stimulus-backed solar panel maker and had raised over $300 million in private capital from the likes of Invus Group, Bohemian Companies, BP Alternative Energy and West Hill Investors, DCM (Doll Capital Management) and Technology Partners.

If there is any light in the solar industry in the last year, it is in the solar financing and installation area with companies like SunRun and OneRoof Energy which both saw healthy financings in the last year. And in Q2 2013 (April), Clean Power Finance raised $37 million of growth equity for its online solar business-to-business marketplace.

solar investment

Interestingly, despite the slowdown in solar deal actvity, early stage deals continue to happen. In fact, almost 45% of the investments to the space in the last year have been at the seed/angel and Series A stages. As money to the solar industry continues to dry up, it will be interesting to see how these early stage companies will fare in raising financing going forward or whether they’ll face the challenge of a funding crunch similar to what tech companies are seeing.

solar investment by funding stage