Over the past few months many execs at tech startups, utilities and analyst firms have asked me: Why is Silver Spring Networks getting so much attention? The startup, which has raised over $150 million in funding and adds communications intelligence to the power grid, has managed to wrap up a growing list of utility deals and has now emerged as the poster child for the current state of greentech. You know a startup is at media hype peak when it gets the glowing New York Times profile — this morning a New York Times story positioned Silver Spring as the quintessential startup for green-leaning venture capitalists that are shifting their focus towards energy efficiency.
The company is solid and has executed well, but that’s not always enough for a startup to garner so much attention. Here are three reasons why Silver Spring is now officially made of gold:
1). Early On Smart Grid The company was building the smart grid before there was one. Long before GE used a dancing scarecrow to explain to Superbowl fans that the power grid was going to get a reboot, Silver Spring, founded in 2002, started working on smart-grid network technology. As The New York Times notes, when Foundation Capital was looking for additional investors for Silver Spring in 2003, it was totally ignored. Grid Net founder Ray Bell was an interim CEO around that time and left the company to pursue his own smart-grid dreams, while very capable current CEO Scott Lang (NYT’s picture right in the front) has brought the company to its current height.
2). Snowball Effect: When you get into a market early you have a chance to win over those crucial early deals. Silver Spring did a deal with Florida utility FPL in 2007 (an expansion of the deal was announced in April) to help build out smart meter infrastructure. Soon other early adopter utilities, like PG&E, started lining up to work with Silver Spring. For a utility that is trying to wrap its head around a multimillion-dollar investment in new technology (unlike an Internet or computing company, it’s very slow moving on this front) a company that has already signed up other utility peers is very reassuring. Silver Spring was also smart to continue raising money from investors in order to be able to grow large at a later stage and be well-positioned to execute on these deals.
3). Luck of the Downturn: For many startups, the downturn was the nail in the coffin. For Silver Spring, it was one of its biggest opportunities. The stimulus funds, meant to reinvigorate American jobs and industry, is pumping billions into the smart grid and has vaulted the tech term into mainstream parlance. Utilities are deploying smart-grid technology not just to get some of the stimulus funding, but also so that they won’t have to build out more expensive power generation as the population grows. And Silver Spring’s newer investors saw the investment as an energy-efficiency play (as the New York Times article pointed out) that became increasingly attractive in the downturn.