Summary:

On Wednesday morning energy software startup Hara plans to announce that it’s raised another $25 million from new strategic investors, including the collaboration of GE, NRG Energy and ConocoPhillips (called Energy Technology Ventures), as well as the investing arm of Japanese conglomerate Itochu.

Sustainable Software-as-a-Service Hara Launches, Backed By Kleiner Perkins

Getting ahead in the race to be the leading resource and carbon management software company will take cash to scale. On Wednesday morning, energy software startup Hara plans to announce it has raised another $25 million in a Series C round from new strategic investors including the collaboration of GE, NRG Energy and ConocoPhillips (called Energy Technology Ventures), as well as the investing arm of Japanese conglomerate Itochu, called Itochu Technology Ventures. Focus Ventures and Navitas Capital were also new investors in the round.

Existing investors Kleiner Perkins Caufield & Byers, JAFCO and Nth Power also joined the financing, and this latest round brings Hara’s funds to $45 million. In addition to the funding, Hara said Kleiner’s Ray Lane has become Chairman of the Board.

Hara officially launched back in May 2009, when the energy, carbon and resource management space was a little less crowded, though the company was already a year and a half old then. Hara’s Software-as-a-Service product gives companies and municipalities the ability to itemize and track all of the inputs (water, electricity, chemicals) and outputs (the product, greenhouse gases, wastewater) that make up their business processes. By identifying both the inputs and outputs, Hara can then suggest how to optimize the overall system, enabling the customer to save a substantial amount of money and reduce waste.

For an average midsize company, Hara’s Environmental and Energy Management software tracks about 1,000 objects (like a truck or a machine) with an accompanying 26,000 lines of data on things like time the item is used, and the fuel source used, etc. The pricing of the software is based on how many objects are tracked, and the software is supposed to deliver a customer a return on investment in three to 12 months via savings from cutting energy, fuel and other resources. Three types of organizations are really good targets for Hara’s tool: power companies (oil, natural gas, etc.) spending millions on energy, companies with deep supply chains like Walmart, and public sectors and cities looking to meet and implement mandates.

Hara says it has more than 50 large customers for its software, including News Corp., Coca-Cola and content distribution company Akamai, and Hara’s strategic investors can no doubt open many more doors for the company.

Hara needed this type of investment and help from these large players to stay ahead in a market that is filled with software giants like SAP and power companies like Avista Corp.  and its subsidiary Advantage IQ. Two years ago, massive software company SAP bought two-year-old startup Clear Standards, which sold software to manage carbon emissions, energy consumption, and water use. Since then, Advantage IQ acquired Building Knowledge Networks and The Loyalton Group, and demand response player EnerNOC bought eQuilibrium Solutions.

The barrier to entry in this market isn’t that high (anyone can build software and sell it), but it’s more about convincing customers that the product actually works and can save them money. Seems like Hara has been successful on this front, and earlier this year, Groom Energy released a report on the top 10 carbon software players in the market, and named Hara as one of the few startups on the list.

As Groom Energy noted in its report, the resource software market has been maturing and has seen fewer acquisitions and venture fundings in recent months. A lot of these companies started to emerge or beef up their software in 2008, as many thought the U.S. would finally enact carbon legislation. But despite the lack of federal carbon legislation, the market for energy and carbon software has grown 400 percent over 2010 and is predicted to grow 300 percent in 2011, says Groom Energy.

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