Simple Energy, a Boulder, CO-based startup that develops cloud-based customer engagement software for energy utilities, has raised a $6 million Series B round, the company announced Tuesday.
The Westly Group led the round, and managing partner Steve Westly will join Simple Energy’s board of directors, the release said. The group is a cleantech venture capital firm located in Menlo Park, CA, and its prior investments include Tesla Motors.
Bullet Time Ventures and Vision Ridge Partners also invested in the round, Simple Energy co-founder and CEO Yoav Lurie said. Both firms are based in Boulder and had previously invested in the company.
The new infusion of cash will be used to expand the sales team as the company tries to add to the dozen clients it already has, Lurie said. Simple Energy also plans to add to the product development team as it launches new features.
“We’re expanding our team pretty meaningfully. Thus far, most of our sales have been founder-driven, and so we’re now building a more robust sales team. We’re also coming out with a couple exciting new products,” Lurie said.
Simple Energy’s pitch to utilities is two-fold. First, it says it can help utilities engage with residential customers to help them save money and energy and boost enrollment in energy-efficiency and demand-reduction programs. The latter is important because more regulators are requiring utilities to have such programs, Lurie said.
But the relationship between customers and utilities often is negative—like when the power goes out, or a bill seems too high.
“We’re deeply focused on changing the way utilities and customers engage. We think the relationship, to the extent there is one, is not nearly what it could be, and to shift it is hugely important to change how the world consumes energy,” Lurie said.
Simple Energy is trying to improve the connection in a couple ways that Lurie said rely on “behavioral mechanics” and gamification.
First, customers will get access to more information. Customers are able to see data about their own energy use, and Simple Energy’s software can encourage them to cut back, using targeted messages delivered by e-mail or through a Web portal. The software can tell customers about their use patterns, provide tips specific to a customer, and help them calculate how much they could be charged if a utility uses tiered pricing, which increases the cost of power as consumption increases.
Customers can share information with friends and neighbors and can compete to see who cuts usage the most.
Simple Energy also helps utilities reward customers for cutting usage. Customers can get credits toward a rewards program that offers deals much like credit card companies do for compiling points through charges.
“People like saving energy and they like winning prizes,” Lurie said. “They also like to feel like their utility cares about them.”
Utilities also benefit in ways the customer doesn’t see, such as being better able to manage their load. Simple Energy says it can reduce consumption during peak periods by more than 10 percent, and that customers who enroll in its program cut use by 6.7 percent.
Simple Energy claims that 27 percent of customers who are offered the chance to enroll in the program will enroll. Currently the utilities that use Simple Energy reach about 1 million customers.
There is a question of why utilities would want customers to use less power. Part of the answer is that the industry is being disrupted. Utilities that operate as regulated monopolies face new regulations that require more energy-efficiency and demand-reduction programs. Deregulation could mean that utilities will have to compete with each other, making customer service much more important.
Westly touched on that topic in a press release when he explained his firm’s investment.
“We have spoken to many utilities—from major investor-owned utilities seeking mandated energy efficiency results to competitive utilities focused on customer acquisition—and they all have a critical need to more deeply engage their consumers. The successful utilities in the future will be consumer-centric in a way the industry has never been before,” he said in the release.
Simple Energy was part of the 2011 Techstars Boulder program. The company had previously raised $2.9 million. It employs about 30 people and has 17 job openings, Lurie said.
Simple Energy isn’t alone in the field. Its leading competitor is Opower, which is backed by New Enterprise Associates, Kleiner Perkins Caufield & Byers, and Accel Partners.
