The last big wave of venture investment in clean-tech startups has long since crashed and rolled back. But if you’re making software instead of something produced by a factory, private investors are still willing to open up the checkbook.
That’s certainly the case for FirstFuel Software, a developer of data analysis software for electric utilities. The Lexington, Mass.-based company says today that it’s raised another $23 million in venture capital, in part to help bankroll an expansion in Europe.
FirstFuel’s software analyzes the energy use of individual buildings, giving utilities the ability to find out where there might be waste in the system. Power providers can use that information to push efficiency fixes for their biggest electricity users — better lighting or an air-conditioning upgrade, for example.
This is a big deal in the two dozen US states, including Massachusetts and most of New England, that have passed environmental rules requiring utilities to hit certain targets for improving their energy efficiency.
Those rules have spurred utilities to look for more insights in the huge amounts of data they collect, an asset that historically had been essentially unused, FirstFuel chief executive Swap Shah said.
“Think of the electricity meter just like a point-of-sale system for a retailer,” he said. “So far, most utilities have done nothing with that data other than send the bill — `Here’s your rate class, here’s your bill, and we’ll send it once a month.’”
FirstFuel is among a group of emerging energy-efficiency software companies that use analytics software to digest large amounts of data and find savings. Competitors include Boston-based Retroficiency and Seattle-based EnergySavvy.
Those kind of efficiency policies are also paving the way for international expansion. The European Union is putting more teeth into its own plans for improving energy efficiency, and that’s meant more interest in software providers like FirstFuel.
One of Europe’s largest energy providers, E.On, is an investor in FirstFuel and has used its software. “We’ve already deployed with them in the UK and are starting pilots in a couple of other countries,” Shah said.
FirstFuel now has about 100 employees and 25 customers, including utilities and government agencies like the General Services Administration and Defense Department. The company doesn’t disclose its revenues, but Shah said the company does expect to see its revenue double or even triple this year.
The latest investment should last FirstFuel the next two years or so, “to a point where we contemplate either an IPO or a large institutional round of funding,” Shah said.
That kind of growth is part of a “next wave” of clean-tech startup investing, as Boston-based investor Rob Day of Black Coral Capital recently wrote, targeting businesses that are either closer to fast-growing consumer markets or able to expand quickly without spending too much money.
FirstFuel is definitely the latter. “We’re a [software-as-a-service] company that happens to be targeting the energy and utility sector, rather than a clean-tech company that is making software,” Shah said.