Kleiner Perkins hatches stealthy software startup Hara

It’s not every day that Menlo Park, Calif.-based venture capital firm Kleiner Perkins Caufield & Byers decides to incubate a cleantech company. In the case of its most recent endeavor, Hara Environmental and Energy Management is literally next door to its sole funder for its Series A round.

Eighteen months after its founding, Hara lifted its stealth mode veil today. The 25-employee company offers a software service solution allowing Fortune 500 companies including Coca-Cola and municipalities including the city of Palo Alto, Calif., to monitor and manage their natural resource consumption and environmental impact. Its software also helps to prioritize and track reduction opportunities, and achieve cost savings.

Hara’s CEO and co-founder Amit Chatterjee told the Cleantech Group that companies aren't taking advantage of savings from operational effectiveness.

“It’s the fruit that’s fallen on the ground,” he said.

Hara’s software-as-a-service (SaaS) application, which combines data collection with mitigation planning and initiative tracking to improve a company’s energy efficiency and environmental impact, is already being used by a dozen U.S.-based companies on a subscription basis. The company makes money from the number of facilities and modules where its technology is implemented.

“We’ve been in stealth mode because we wanted to focus on building research and product development that really scaled for a global company,” Chatterjee said.  “Now we can handle an influx of partners and customers.”

Backed by Kleiner Perkins in 2008, Hara has raised $6 million to date. Even Al Gore, a Kleiner Perkins partner and the former U.S. vice president, personally vetted the company’s business plan. The environmental champion encouraged Hara to have global aspirations.

Hara started booking revenue in August 2008, but Chatterjee would not indicate how much, or its profit projections. Chatterjee said the company's current funding should last them beyond 2010.

Kleiner Perkins partner and Hara co-founder Ajit Nazre indicated the company may need to raise additional funding and hire more employees
if it gains market traction and decides to scale faster. If a fourth quarter 2009 Series B round happens, Nazre said Kleiner Perkins likely wouldn’t be the only investor.

Nazre and Chatterjee have a history that goes back almost 10 years, and when the Kleiner Perkins partner heard of Chatterjee’s idea, they decided to create a business plan and assembled a top notch team.

“It’s a lot of work, and it’s a lot of fun to be an entrepreneur and roll up your sleeves and be part of the startup as opposed to sitting on the other side,” Nazre said.

He cited other rare examples of Kleiner Perkins incubating a company, including Genentech and Excite.

“We’ve been really intrigued by the whole theme of 'Can enterprises really embrace energy efficiency and emission reduction?'” Nazre said. “We have high hopes for this company."

Solutions for carbon management and the creation of carbon credits have been getting the attention of venture capitalists, with San Francisco’s Carbonflow, Victoria, British Columbia's carbonetworks, Burlingame, Calif.-based Planet Metrics and Sterling, Va.-based Clear Standards pulling in funding for their software suites (see Growing market for carbon software).

Carbonflow has been developing software to lower the cost and time it takes to create a credit, while carbonetworks provides software to manage emissions inventories. In 2008, Carbonflow closed its Series A round with plans to begin selling its software for carbon-trading markets (see CarbonFlow gets $1M to close Series A).

And in November, two more companies raised Series A rounds: Planet Metrics closed on $2.3 million from Draper Fisher Jurvetson and others for its carbon modeling and visualization software (see $4.8B flows in cleantech sector this week); and Clear Standards raised $4 million for its enterprise software for tracking emissions, water and energy use, and energy efficiency. Investors included Novak Biddle Venture Partners and Kinetic Ventures (see Debt, acquisitions lead week's cleantech deals). 

Chatterjee said Microsoft’s Excel is Hara’s No. 1 competitor. But Hara claims its enterprise SaaS play is easy to be trained on and is also auditable under current or future regulations.

Other companies are measuring emissions or carbon management, but Nazre said what these competitors are doing addresses “just one piece of the puzzle,” as opposed to Hara’s complete package.

Hara said it gives customers auditable control over what Chatterjee called their “organizational metabolism index”—the collective resources consumed and expended by an organization—including energy, fossil fuels, water, waste, carbon and other resources. Hara’s software enables customers to find savings from energy, water and waste abatement strategies.

Hara’s application modules include aggregating environmental record information, often through manual entry. Chatterjee said this helps to provide a comprehensive view of resource consumption, greenhouse gas emissions and environmental impact. It in turn allows Hara to help its customers define strategies, forecast reductions, identify metrics and calculate timing and benefits for each initiative. From there, Hara helps the customer manage the implementation of environmental and energy programs and track results, using this methodology to foster future improvements.

Coca-Cola is an early adopter of the concept, with intentions to scale on a broader level. Chatterjee highlighted that Hara already has global reach through the beverage company, which has more than 1,000 facilities around the world, and data that has to be secure.

Palo Alto’s Energy Risk Manager Karl Van Orsdol said he thinks the city can achieve $2.2 million in energy abatement savings, or a 15 percent reduction, between now and 2012. He thinks the city could save $100,000 to $300,000 in energy between now and the end of 2009.

Palo Alto has invested $24,000 in Hara’s technology, which will come up for renewal in the next fiscal year. By December of next year, they’ll have spent $48,000 on the software subscription.

“It is cutting edge in the sense that Hara really has a good overview of where the regulation is going and where people want to be in terms of reporting, and they are the forefront of doing this management solution,” Van Orsdol said.

Chatterjee said he has also been in engaged in conversations with legislators in forming “a foundation for discussion on how a new economy can be built once carbon is priced, without causing havoc to the current system.” The CEO is launching a book on June 15 co-authored with Crossing Media president Jay Whitehead called "The Post-Carbon Economy: The 5 Secrets of Corporate Leadership When Carbon is Priced."