CNET’s Martin LaMonica raised the interesting question last week: Is there an investment bubble building around the smart grid? He cites the opinions of several investors worried about too much money being invested by venture capitalists, corporations like Cisco and IBM, and even governments. From my perspective, there is one clear area of the smart grid that is seeing too much investment from venture capitalists, specifically — home energy management tools — but much of the smart grid investments coming from IT firms and the federal government just represent the first phase of funds that will help build a potentially huge market. At this point I don’t see unreasonable amounts of money being invested into many other areas of the very nascent smart grid sector.
But venture capitalists have clearly been flocking to the home energy management space. It’s a favorite for VCs partly because they can easily understand it — it looks (and is) about connected gadgets, software and wireless communications. At this point the amount of VC-backed companies is really starting to get out of control. Earlier this month both home energy management dashboard companies Tendril and AlertMe raised multimillion-dollar rounds; last week home energy management startup EcoDog raised $4.6 million. Here are 10 startups that are offering home energy management tools and another that is using open source to make the products even cheaper (and result in lower margin for the companies that make the tools). Never mind the huge, blue chip companies that are also building these tools, like GE.