VantagePoint leads $30M round in AMI solution leader

VantagePoint Venture Partners has had a busy week.

The San Bruno, Calif.-based venture capital firm led a $30 million Series C fund round in Boulder, Colo.-based Tendril Networks today, after joining in South San Francisco, Calif.-based Solazyme’s $57 million Series C round yesterday.

Under normal circumstances, Trendil’s president and COO Tim Enwall told the Cleantech Group his company’s news would be a “humdrum” announcement. But with VCs holding tightly to their pocketbooks amid the economic recession, it’s one of the largest fundings for a high-tech firm, even though it might not seem like a large cleantech financing deal compared to solar or wind.

More importantly, Enwall said it validates the company’s focus on consumer empowerment from the smart grid. Tendril, which provides open, demand side residential energy management solutions for the utility industry, claims it enables consumers to save 10 to 50 percent in electricity costs.

VantagePoint Principal Lee Burrows said the firm doesn't just think Tendril is a leader in the Advanced Metering Infrastructure (AMI) space.

“We believe Tendril is the category leader,” he said.

Over the past two years, VantagePoint has been researching the AMI space, talking to leading utilities and meeting with startups in pilot and trial phases with utilities. Everywhere the VC firm went, Burrows said Tendril’s name kept coming up.

Burrows said Tendril is unique in that instead of working in competition with thermostat providers or smart meter companies, Tendril can opt to partner with them. It already has partnerships with companies like meter and smart grid companies including Liberty Lake, Wash.-based Itron and Redwood City, Calif.-based Silver Spring Networks.

Burrows said VantagePoint is expecting AMI deployment to roll out faster than original estimates a year ago, spurred by U.S. President Barak Obama’s stimulus funding and peak load demand (see Smart grid could be early winner in U.S. stimulus package). He cited how most major and many minor utilities are already moving into pilot and rollout phases of smart energy management products and services, where Tendril’s platform could be applied.

“We really have a high regard for the management team,” Burrows said. “We think the company is very well suited for growth as a category leader for what they are doing. They can grow to be a large, sustainable independent company.”

Tendril said it has more than 20 utilities looking at its technologies or testing them in the field in key states including Texas, Massachusetts, Missouri and Colorado. Texas-based electricity wholesaler Reliant Energy (NYSE:RRI) and Massachusetts-based, investor-owned electric and gas utility NStar (NYSE:NST) have both already publicly announced they are rolling out Tendril’s solutions.

Other key states where Enwall said the company has the leading edge include Kentucky, Florida, Indiana, Connecticut and Arizona. The company is focused on the United States and Canada.

Today’s fresh funds are expected to allow Tendril to scale to meet increased demand for its Tendril Residential Energy Ecosystem (TREE) platform, which relies on ZigBee communication. TREE is an integrated software and hardware solution that provides two-way dialogue between utilities or retailers and customers, through interfaces such as a web-based portal or a mobile device platform.

Enwall said the funds are also expected to carry the company to cash-flow positive.

“We don’t need to raise capital again,” he said.

Tendril also plans to invest to build out its growing network of TREE partners, including in-house device and appliance manufacturers, advanced meter vendors, application developers and others. The 50-employee company plans to hire 100 new employees in the next 12 to 18 months, Enwall said.

Additional investors in today’s round included Good Energies, RRE Ventures and Vista Ventures.

Tendril raised a $12 million Series B round in March 2008. RRE Ventures led the round, with return backers including Access Venture Partners, Appian Ventures and Vista Ventures (see Smart tech for energy pulls funding). Other smart grid companies that raised funds around that same time included London's Onzo, which makes consumer units to monitor energy consumption, and Arlington, Va.-based GridPoint, a developer of a smart grid platform for utilities (see Energy efficiency could use more development).

Though it's one of Tendril's top competitors, Burrows said GridPoint hasn’t been focused on the overall connectivity between the utility and consumer.

VantagePoint also joined in a $57 million Series C round announced yesterday by Solazyme, with Braemar Energy Ventures and Lightspeed Venture Partners co-leading the round. Solazyme develops biofuels from microalgae.

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