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Silver Spring Nabs $75M For Smart Grid Rollout

By Jonathan Shieber

Venture Capital 10/8/2008 - Silver Spring Networks Inc. said it has commitments for $75 million in fresh cash and plans to expand globally thanks to the first publicly disclosed investment from Kleiner Perkins Caufield & Byers' clean technology fund.

The cash will be used to help shore up its balance sheet as the utility networking technology provider looks to hit profitability by mid-to-late 2009, Silver Spring Networks Chief Executive Scott Lang told Clean Technology Insight.

"Part of this is to make sure we have a very strong balance sheet to pick up the contracts that we have, part of this will be used to fund a global expansion, and part of this will be used for [acquisitions of] products and services," said Lang.

According to Lang, utilities are beginning to understand how so-called "smart grid" technologies that work to improve the management and oversight of power use across utility grids can save them money. Indeed, rather than seeing the company's projects slow down because of the credit crunch and market meltdown, utilities are increasingly asking the company to roll-out its technology more quickly to accelerate savings.

The KPCB Green Growth Fund was joined in the round by previous Silver Spring Investors Foundation Capital, JVB Properties and Northgate Capital. Part of the new financing has been reserved for additional strategic investors, but Lang said that if an agreement cannot be reached by the end of the year, existing investors will provide whatever piece of the financing was uncommitted.

As a result of its investment Green Growth Fund co-manager Ben Kortlang will take a seat on the Silver Spring Networks board of directors. Kortlang told Clean Technology Insight that the networking company typified the later stage focus of Kleiner's $500 million growth-oriented fund.

"The green growth fund doesn't take significant technology risk," Kortlang said. "[And] Silver Spring is a great example of a company that has a technology and they've proven that it works. They've demonstrated tremendous results."

Redwood City, Calif.-based Silver Spring Networks has already signed major contracts with utilities including Pacific Gas & Electric Co. and Florida Power & Light Co.

Under the contract with San Francisco-based Pacific Gas & Electric, Silver Spring Networks could make as much as $250 million over the duration of the deal.

The company is already installing its networking technology that links devices in homes and offices with utility meters, and then links those meters to the larger architecture of the power grid.

And it is beginning to look beyond U.S. borders, according to Lang. Silver Spring has received a verbal agreement for a contract with an undisclosed utility outside of the U.S., where the company's networking hardware and software services would be installed in approximately 1 million homes.

"The first application we will deploy is metering and the second application we will deploy is distribution automation," Lang said of the new contract.