Deregulation in the energy industry and widespread concerns over the possibility of domestic power shortages have prompted the recent rise of several new companies, many offering myriad solutions to help utility providers conserve and monitor power usage.
Last week, one of those firms captured $5.5 million worth of venture capital in the initial tranche of a Series C deal. Fort Collins, Colo.-based Sixth Dimension Inc. has built one of the first service-delivery networks for utility providers, enabling them to link several devices on the power chain and deliver electricity more efficiently. That could include California, where the plight of cash-strapped utilities has brought rolling blackouts and extensive power shortages.
That technology has caught the attention of a few prominent VC investors that focus specificially on the energy sector, including EnerTech Capital, which led the deal’s first tranche, and RockMountain Ventures. Series B lead Energy Ventures Group also participated.
Sixth Dimension plans to add another $4.5 million to $7.5 million within the next month. The company declined to reveal who some of the prospective investors might be, but one likely candidate seems to be San Francisco-based Nth Power Technologies Inc.
Including the proceeds it has drawn so far from its third round, Sixth Dimension has raised $10.6 million to date.
“Sixth Dimension is offering a network intelligence backbone [for utility providers], and that puts it right in the sweet spot of our investment strategy,” said David Lincoln, a managing director at EnerTech Capital and Sixth Dimension’s newest board member. “What they’ve developed is probably going to be the foundation, we believe, of future energy information networks, and will lead to communication by and between devices on a distributed energy network in the future.”
As such, Sixth Dimension’s target audience is electricity providers and original equipment manufacturers (OEMs) that are bringing their services to a specific client base, such as manufacturers of microturbines or other electricity generation units. Its ideal clientele would include such turbine manufacturing giants as Caterpillar Inc., Capstone Turbine Corp. and Honeywell International Inc., although it has no current relationships with the aforementioned firms.
With the specific needs of these potential customers in mind, the company’s networking technology provides a platform for electricity providers and their clients to monitor energy use, remotely control on-site power generation, curtail energy loads and receive vital pricing information. Moreover, Sixth Dimension offers a device-neutral platform, meaning any type of equipment can be networked, including engine- and turbine-driven generators, fuel cells and microturbines.
Lining Up Customers
To date, Sixth Dimension has brought 10 paying commercial customers on board, although CFO Laura Arnold declined to disclose their names, citing confidentiality agreements.
She added that the company doesn’t have any real direct competitors, although it does rub elbows with enterprise software providers that attempt to sell their offerings by convincing customers that they don’t need networks in order to use their products.
“Our greatest competitor is market confusion,” she said. “Someone out there is selling a software product, but the purchaser doesn’t realize he needs a network behind it to run it.”
The real application of the company’s network comes when a power provider wants to bring its services to multiple end-use customers, and when they are required to network five or six devices in one or more buildings. Sixth Dimension’s flagship offering enables them to do that and, what’s more, customers can scale quickly and run the network over regular copper-wire telephone lines, eliminating the need for expensive fiber optic connections.
“We have a plug-and-play device and we can hook it up in two hours, as opposed to [going through the rigors] of major integration projects,” Arnold explained.
To that end, proceeds from the Series C transaction will likely go toward further development of the company’s product. In addition, Sixth Dimension plans to hire at least five more employees on the marketing and engineering sides in the near-term, bringing its total payroll to 37 workers.
Once closed, the company’s latest capital infusion is expected to last for the next 18 to 24 months, Arnold said. No immediate plans are in the works for another round of private financing, she added.