A Cleantech Startup Looks to Raise $1.2M for the Greening of Hospitality Industry

11/6/09Follow @bvbigelow

Dave Paton and Dave Moody tell me they founded EESG, a San Diego cleantech startup also known as Energy Efficiency Systems Group, last year in anticipation that soaring energy prices would unleash strong demand for practical alternatives. But they didn’t focus on new technologies for alternative energy sources. They focused on energy efficiencies.

They also wanted to take advantage of their extensive experience with the hotel industry. Paton had spent 30 years working as an executive at the Hilton, Radisson, and Doubletree hotel companies. And the company the pair had previously founded, Vista, CA-based Paramount International Telecom, provided a voice-activated automated attendant and message system for the hospitality industry. So they knew hotels. As Paton and Moody put it, they understood that for a hotel to keep its four-star rating, it was going to have to keep the air-conditioning running through the summer.

As a result, Paton and Moody concluded that developing technologies to help hotels and other facilities improve their energy efficiency was a likely growth business ideally suited to their expertise and industry contacts. And it was a business that wouldn’t require huge amounts of external capital. The business partners say they set out to create a system that incorporated the best technologies for sensing and measuring energy use, for monitoring and communicating such information in meaningful ways, and for remotely managing everything—from the 15-ton air-conditioning chiller on the roof to the boiler in the basement.

“Every piece of equipment has a sweet spot that it operates at with optimum efficiency,” Moody says. The energy conservation and management systems that EESG has developed are designed to identify equipment throughout a facility, and to optimize the performance of each unit. “We know every model, every unit, every product type, and we know how to control it,” Moody says. “Our system is specifically programmed for that equipment, say a Trane 360, and to keep it operating at that sweet spot.”

To tie it all together, they hired software engineers to develop proprietary software analytics that provide a comprehensive and real-time energy audit of customer facilities. EESG also developed a Web-based interface that can be accessed online or by a smart phone. Paton says their system, once installed, reduces customers’ energy consumption by 8 percent to 15 percent annually. The partners say EESG has implemented its technology so far at four hotels in the U.S. and Canada, including the luxury Fairmont Hotel in Washington D.C.

Fairmont Hotel

Fairmont Hotel

“The building engineer can be anywhere in the world,” Moody says. “You just go to a secure portal, and see how the system is operating. Or maybe the vice president of asset management wants to drill down to one chiller at one property, but he also wants it aggregated to show all the chillers at all the buildings that he manages.”

So far, the founders have funded EESG’s technology development themselves, along with friends and family. But they are now looking to raise about $1.2 million to expand the 10-employee company’s sales staff, purchase inventory, and for public relations and marketing.

Moody and Paton say they have raised about half from wealthy individual investors and cleantech investment funds, such as Longboard Capital Advisors of Santa Monica, CA, which has invested $300,000 from its Blue Earth Fund in EESG’s current round.

“Although we typically do not invest in early stage companies, it was an easy choice to invest in the management at rapidly growing EESG,” Longboard managing partner Brett Conrad wrote in an e-mail to me last night. “We felt like our investment risk was further reduced by management’s deep experience and relationships in hotel and resort management around the world. Because Longboard Capital Advisors focuses on clean tech investing, we are particularly excited by EESG reducing their customer’s carbon output while at the same time while achieving extraordinary ROI’s by significantly reducing energy costs from power hungry air conditioners, elevators and escalators.”

Moody sums it up a little more succinctly. “It is a good green thing for sure,” he says, “but the bottom line is that it helps you save money.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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