One of the bigger players in the smart grid networking space, Silver Spring Networks, will hit profitability in the third quarter of this year, the company’s CEO Scott Lang tells Bloomberg. The end of the third quarter is about a month and a half away, and about seven years after the company was founded. From a web world perspective, that’s not exactly speedy, but for a company building networking infrastructure, the time to profitability isn’t that unusual.
Keep in mind, Silver Spring also had a bit of a rocky start during its first few years. As the Bloomberg piece explains, in mid-2006, San Diego Gas & Electric, its flagship customer and basis of its venture capital investment, canceled a major order after the technology failed some tests. Fortunately the company’s backers at Foundation Capital had faith and stepped in to invest another $44.5 million, fixed the technology and turned the firm into the leading player it is today.
Lang also tells Bloomberg that Silver Spring hopes to hit $200 million in revenues by 2010, and the writer suggests that the company could hold an IPO “in the next year or two.” The writer isn’t the only one thinking along those lines. As we recently reported, investor Steve Westly, former California state controller and founder of the Westly Group, speculated that Silver Spring would be one of three companies that would go public in early 2010.
An IPO would deliver to Silver Spring a few things that it needs in the coming year: capital and growth. The company now has to compete with some of the larger IT networking companies like Cisco for utility deals, so will need capital and size to stay competitive — utility firms mostly prefer to work with large companies. And of course, just from a liquidity perspective, an IPO would make its founders and investors mighty happy.