Earth2Tech posts an overview of a discussion topic at Green:Net - Green:Net Power Grid 2.0 Panel. I wish I was there for the conference, because I think they are bringing up a number of interesting topics for the venture community. Case in point, Andrew Tang, Sr. Director of Smart Energy Web @ PG&E, brings up an important theme, that I think a lot of entrepreneurs and start-ups underestimate when getting into the utility sector. Tang says that the road to working with utilities will likely run through one of the existing large businesses who supply the power companies (e.g. GE, Siemens, Areva, etc.), and the point he's trying to make is this: Utilities are VERY risk adverse. This implies a number of barriers to market entry that cannot be stressed enough:- Existing relationships - this isn't the best avenue for a salesperson cold call...
- Understanding of Energy & IT - the grid isn't the Internet, and can kill people if things go wrong, you need to get it right the first time
- Patience - These are going to be looooooong sales cycles, everything is try before they buy, so make sure your venture has enough capital to get you through to PO and delivery
- Prior sales - while this may seem like a catch-22, having existing utility customers will be quite the boon
- Be ready to scale - When you do get an order, you need to be able to deliver in an expedient manner at utility scale
Several of the more prominent and successful startups targeting the utility market (Silver Spring, eMeter, Gridpoint, etc) have seen some initial success through both existing relationships, as well as a strong understanding of utility energy networks. I'll also venture that they've also got a fair amount of patience, given that the three companies I mentioned have all raised a substantial amount of money (Silver Spring and Gridpoint have each raised over $100m), I think they have the wherewithal to make significant headway before running into trouble.
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