Sequoia Capital, the venture firm that helped launch the likes of Cisco, Apple and Google, has taken a cautious approach to investing in cleantech — a year and a half ago it had only announced four energy-related investments, and most of those were older, established firms. Since then, Sequoia has been ramping up its energy portfolio, and here’s the latest: eMeter, an 11-year-old firm that makes software for smart meter systems. On Wednesday eMeter announced that it has raised $32 million in a third round of funding led by Sequoia and including existing investor Foundation Capital.
eMeter fits into Sequoia’s cleantech investing strategy of funding companies already selling products and bringing in revenue. The smart meter software maker has made deals with large utilities like Texas-based CenterPoint, which will use eMeter’s back-end data management system for a rollout of 2 million smart meters starting in March and finishing up in 2013. eMeter also recently launched consumer-facing energy management software that CEO Cree Edwards says will eventually deliver a substantial portion of the company’s sales.
For eMeter, the investment will likely be the last from private funders, according to Edwards, who also said that eMeter has now raised about $57 million in total. The funding will allow eMeter to build out its consumer energy management platform and potentially develop platforms to incorporate electric vehicle charging and distributed energy storage. The Sequoia investment is also a recognition that eMeter likely has one of the strongest products and business models on the market, since, as we pointed out, the firm does few investments in the space. Edwards said Sequoia did “so much research and due diligence” on eMeter before making the investment.
For Sequoia, the eMeter investment represents one of its first forays into the smart grid, although it has invested in several energy efficiency plays, including lighting efficiency startups Luxim, Changelight and SynapSense, which has built a wireless energy-efficiency system designed to cut down the carbon footprint of energy-hungry data centers.
While Sequoia’s cautious approach is a diligent one, the VC firm did lose one of its oldest and most well-known investors to Khosla Ventures earlier this year: National Semiconductor co-founder and former Sequoia partner Pierre Lamond. The 78-year-old Lamond told the New York Times that he made the switch to invest in cleantech for Khosla partly because he appreciates Khosla Venture’s focus on growing companies from scratch. Sometimes safer plays aren’t always the most exciting.