Atlanta-based data-center-efficiency startup JouleX has raised $17 millionfrom Sigma Partners, Flybridge Capital Partners, Intel Capital, Target Partners and TechOperators. As energy prices rise, energy generation facilities are stretched and hyperscale becomes normal, companies like JouleX should find it easy to spread their message.
As we reported yesterday, data center operators are increasingly running out of power or simply finding power costs consuming too great a percentage of the IT budget. Paired with increased computing demand that is forcing some build entirely new data centers, energy efficiency becomes an even bigger issue. To help save power and money, they’re looking at a number of options ranging from server consolidation to cloud computing.
As data center engineers from Facebook, Netflix and other large operators will no doubt discuss at Structure 2011 (now less than two weeks away), these issues are exacerbated at webscale because there is continuous heavy traffic across tens of thousands of servers.
JouleX is one of a handful of startup, including Racktivity and Viridity, and determined to solve the energy issue by monitoring the energy consumed by every device within a data center or across a network. The company’s flagship product, JouleX Energy Manager, takes a fairly unique approach to the problem by being agentless (i.e., there is no need to install anything on the monitored devices) and by incorporating a policy engine that actually governs energy usage based on user-defined rules.
JouleX, which has about 100 customers around the world, says it will use the new cash to further expand its global presence. In November, JouleX was among the first 12 winners of General Electric’s “ecomagination challenge,” which garnered it a share of the $55 million award.
Power trio: Jon VerSteeg, Tom Noonan and Tim McCormick of JouleX, which helps companies monitor and manage power consumption of networked devices.
Atlanta Business Chronicle - by Urvaksh Karkaria, Staff Writer
Intel Capital is among a group of investors pouring $17 million into JouleX Inc., an Atlanta startup that focuses on energy management technology.
JouleX will use the new capital to more than double its workforce and expand in four continents.
The startup helps companies monitor, analyze and manage the power consumption of network-connected devices, including PCs, printers, servers and networked devices and systems in data centers. “Energy is the single-largest operating expense in a typical business that remains unmanaged,” JouleX CEO Tom Noonan said.
The $17 million, raised from Intel Corp.’s venture capital arm, Sigma Partners and Flybridge Capital Partners, will help JouleX expand into new products and geographic markets and create nearly 100 jobs over the next 12 months.
JouleX’s quick and substantial raise is a testament to investor interest in the white-hot energy management space.
The company, which launched last spring, narrowed down the list of potential suitors — venture capital and private equity firms — from more than 120 to a dozen.
Sigma was an investor in Internet Security Systems Inc. (ISS), which Noonan launched on maxed-out credit cards and eventually sold to IBM Corp. for $1.6 billion For Intel Capital, the JouleX investment is financial — and strategic.
Intel invests in companies that offer disruptive technologies and encourage energy efficiency, said Charles Scott, director of software and services at Intel Capital.
“By giving corporate executives a snapshot of the energy usage of each device across the enterprise,” Scott said, “they will be able to clearly see the value of upgrading to the latest generation products, that are much more energy efficient.”
Energy management through low-cost technology, like the kind JouleX offers, drives efficiencies to the antiquated global energy market, DLA Piper attorney Jeff Leavitt said.
“Couple that with a strong management team, sustainable value proposition and large scalability, and you’ve got just the kind of opportunity investors like in venture companies,” said Leavitt, who represented JouleX on the raise.
JouleX software, which does not need to be installed on networked devices and systems, remotely monitors and analyzes energy consumption. The startup claims its software can cut up to 40 percent of a corporation’s IT-related power consumption.
“There is emerging demand for energy management products that span an entire organization,” Andrew Donoghue, analyst at The 451 Group, wrote in a research report. “JouleX is well-positioned to meet this need.”
JouleX is capitalizing on escalating energy prices and Corporate America’s need to cut expenses amidst sluggish revenue growth.
About 40 percent to 60 percent of electricity used by companies is wasted, as computers, printers and copiers are left on long after employees leave the office.
The world is gulping more power than ever before. Yet, the supply of fossil fuel, used to generate much of that power, is shrinking, Noonan said. That supply-demand imbalance is reflected in soaring energy prices.
The shift of consumers and corporations toward cloud computing is escalating demand for power-hungry data centers.
“Thirty new power plants will need to be built in the next five years, just to power new data centers coming on line in the United States,” Noonan said. “By 2013, the energy cost to operate a data center will exceed the capital cost of the equipment in it.”
That makes the data center industry a lucrative market for energy management technology. Data centers account for about 35 percent to 40 percent of JouleX revenues. The problem with a hot industry is everyone wants a piece of it.
JouleX is competing in a fragmented business, noted Simon Mingay, vice president of research at Gartner Research.
“A lot of vendors, large and small, have entered this space, approaching the capability from many different directions and making for an increasingly complex landscape,” Mingay said. Maintaining its niche will be an ongoing battle for JouleX. “If an enterprise is managing its energy management needs in a very siloed way, JouleX will struggle,” Mingay noted. Selling the concept of energy management in the United States — where power, so far, has been cheap and plentiful — is an uphill task. “Our cost of energy is cheaper here than anywhere else on the face of the Earth,” Noonan said.
While rapid growth is a good problem to have — it’s still a problem. “We’re scaling a business very, very fast here,” Noonan said. “It’s a challenge operationally.”
In an effort to scale, JouleX is tapping new customers and geographic markets. JouleX, which sells directly to large enterprises, is now negotiating with telecoms to offer energy management services to small and midsized businesses. Using this approach, the telecoms get to offer a value-added service to their customers. The software-as a-service model allows businesses to monitor and manage energy use for lower upfront cost.
Donoghue, with The 451 Group, is skeptical of JouleX’s strategy of chasing the small- to midsized business market.
“We believe [JouleX] is really focused on the data center and see this as their sweet spot,” he said. “The other offerings — PC power and enterprise energy management — are certainly lucrative markets, but don’t seem to be core to JouleX’s strategy.” JouleX’s modus operandi, Donoghue suggests, is to get a foot in the door through the PC power management business, and then build trust so it can get access to the company’s data center business.
Domestically, JouleX has expanded into government hot spot Washington; financial services hub New York; and California, where energy prices remain high and environmental regulations stringent. “We’ve been shipping special cars to California for the last 20 years,” Noonan quipped.
Overseas, Noonan sees potential in Europe and Latin America and Asia. Regulations, high energy prices and a concentration of multinationals make Europe an attractive market. Unreliable power infrastructure in Latin America increases the need for better energy management to take the pressure off the grid.
The tsunami and subsequent Fukushima Daiichi nuclear disaster shut down Japan’s nuclear power industry, Noonan said.
“That was 32 percent of the energy capacity of the world’s third-largest economy,” he said. “They’ve got to conserve energy.”
Background: Atlanta-based JouleX has developed software that helps companies monitor, analyze and manage the power consumption of network-connected devices, including PCs, printers and servers.
In the news: JouleX has raised $17 million from Intel Capital, Sigma Partners and Flybridge Capital Partners.
Employees: About 60
Projected 2011 revenues: About $10 million
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