EnerNOC — IPO on NASDAQ: ENOC (2007)
EnerNOC (Nasdaq ENOC) came to Cambridge Innovation Center in the midst of a fund raising tour of more than 30 venture funds and angel groups in the fall of 2002. The two founders, Tim Healy and David Brewster, were looking for a few million dollars to take advantage of a deregulated New England electricity market. EnerNOC’s idea was to remotely connect to back-up generators, usually found sitting idle on building roofs, and dispatch them in aggregate during times of peak demand. A virtual peak power plant with none of the capital invested, no transmission lines and their incumbent social and environmental impact, no distribution costs. Just a bit of instrumentation, and shared profits with the building owner. Load curtailment (turning down or shutting down elevators, chillers, etc) would work as well. A few companies were doing something similar here and there using phone calls or radios, but David and Tim were the first to see this could be a scalable business – that expanding electricity production capacity for peak times could be avoided altogether in many cases by making the electric grid smarter.
Todd and Scott came out of that first meeting intrigued. Everything the team said was logical, but energy markets are a slow moving morass of regulation and perverse incentives. No place for a startup, particularly a startup that required some utility and environmental regulations to be rewritten. But the economic incentives and public benefits were so compelling that Scott decided to enter diligence. Tim and David had to be patient, bringing their prospective investors up to speed on the complexities of the regulatory environment. Scott solicited the help of Raj Atluru, a good friend and noted energy investor at Draper Fisher Jurvetson. With Raj’s help and 6 months of diligence and negotiation, terms were agreed to. Simultaneously, Bill Lese at Braemar Energy Investors had been getting excited about the company, and Raj and Scott enthusiastically included Bill in the A round, which closed in June of 2003.
Less than a year later, Tim and David had the company headed toward a $10 million run rate. “We do things differently at EnerNOC” was the constant refrain. Sometimes this meant extra complexity and legal fees, but it also meant that the team would execute to plan without excuses. To this day, EnerNOC is the only company we have ever encountered that exceeded the plan they set forth on the first day we met. We always discount the revenue hockey stick by a year or two. In the case of Tim and David, that was wrong-headed. They were out to change the world, and nothing would stand in their way.
Adam Grosser of Foundation Capital beat out other interested investors to capture the B round. After a total of $11 million raised, the company was on the path to profitability. We all chose, however, to grow faster instead of produce profits, as there was a land-grab strategy at work, and eventually the company raised a great deal more cash on very favorable terms, including 3 times in the public markets.
Good fortune struck EnerNOC in the form of spiking oil prices and global temperatures. “Green” was suddenly mainstream. Bankers came calling, a prospectus was floated, and the IPO occurred in June of 2007. Today, EnerNOC’s team is largely intact, and David and Tim continue on their mission to change the world. We wish them well, and thank them for their patience with us as we learned about their business in the beginning, and relentless, tireless execution ever since.
New Atlantic Ventures Team
- Tim Healy
- David Brewster
- Greg Dixon
- Tim Weller
- 101 Federal Street
- Boston, MA 02110, USA
- Key Links
- Company Website