David vs. Goliath — Doubling down on David Energy to build a cleaner, more efficient and resilient energy future for us all

Just over a year ago, we announced our investment in David Energy — a new type of power company.

Our thesis was simple:

1. Buildings represented the surest, most efficient and economical path to decarbonization

2. Energy management technology had demonstrated incredible ROI for building owners, but still struggled to gain adoption outside of enterprise buyers given low willingness-to-pay

3. Regulatory mandates (like Local Law 97) would now force building managers to address energy management, but many of these building managers didn’t have an IT budget

4. If we could provide these systems for free (bundling technology with energy services like power and demand response) then we could find an alternative path to monetization (as their power provider), greatly reducing the friction in the sales cycle by attacking an existing cost center, rather than adding to their IT budget

5. This would result in the company saving customers a ton of money (15–30%) without any upfront investment, while enabling the company to attack $400b of spend in the deregulated energy market

We invested in an incredible team that brought together world-class startup talent with industry leaders who understood the competitive dynamics of the landscape and how disruptive this could be. The goal for the seed round was straightforward — to go from being a great “software company” (which demonstrated incredibly productive returns for its clients) to being an even better “energy company.”

In the year since we’ve announced the investment (and their partnership with Hartree to become a licensed retail energy provider), David Energy has made outstanding progress. The team has brought an offer to market that is dramatically cheaper than competitors while maintaining margins above and beyond their industry peers. The technology continued to outperform during one of the most volatile stretches we’ve seen in energy markets in recent years, driving incredible ROI for customers. Feedback from industry leaders, customers, and partners has been overwhelmingly positive and we are excited for the bright future that lies ahead of the team.

As David Energy executes on its strategy, we are seeing two incredibly profound trends within the company that give us the belief that David can topple Goliath.

• As energy volatility grows, it becomes an increasing cost center for competitors but a value driver for us. In high volatility periods when prices soar, other retail energy providers face massive financial risk, whereas we at David Energy see volatility as a financial opportunity for us AND our clients, leveraging demand response and battery discharging to generate revenue during these peak periods. Our ability to respond to real-time volatility enables an advantage over legacy players that is even greater than we could have hoped for.

• Our network of assets grows stronger with every new device added. Each asset we add is proving to further the advantages seen in the graph above. The power industry has always been dominated by economies of scale — mass production of energy at the lowest cost possible. For the first time ever, David Energy is demonstrating a power company with network effects. Our personal opinion is that network effects trounce economies of scale and we believe we are seeing the early signs of that happening.

An investor always learns so much through the journey of a startup, but our initial journey with David Energy journey has been a master class on the future of energy markets. It’s actively informing our point of view on the New Energy Economy, while incubating our belief that the grid of tomorrow will look more like the internet than the grid of today. We see David as a foundational player of Grid 2.0, which we believe is one of the largest, most lucrative and most impactful opportunities of our time.

Today, we’re excited to announce the addition of Keyframe Capital and Union Square Ventures to the David Energy family. I’ve had the pleasure of knowing Ben Birnbaum (Keyframe) and Rebecca Kaden (Union Square Ventures) for years and think they will be incredible contributors to the David Energy mission. This round will enable the company to accelerate deployment of its SMB and Residential offerings in New York while also expanding into Texas. We couldn’t be more excited to see this round help David bring “power to the people” (last dad joke, I swear).

Please join us in congratulating David Energy on this latest step in their journey. We’ll be hiring exceptional individuals across all levels in the company, so please consider joining us in our mission to build a cleaner, more efficient and more resilient energy future for us all.

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