Power2Switch, a Chicago startup that helps consumers acquire cheaper electricity with a few mouse clicks, has raised $1.3 million, closing its first round of fundraising and exceeding its $950,000 goal.
Power2Switch is the second startup of this year's Excelerate Labs class to hit or exceed its fundraising targets.
Energy startup powers past fundraising target
All but two of the investors are based in Chicago, company co-founder Phil Nevels said. The round was led by OCA Ventures, with participation from Hyde Park Angels, New World Ventures, I2A and nine angel investors. Michael Polsky, among Chicago's most experienced entrepreneurs in the energy sector, is among that group and will be joining the company's board.
Power2Switch's website offers a simple tool to help people shop for cheaper electricity. But what's so attractive to investors is that every time a consumer switches, Power2Switch gets a monthly commission for as long as the customer stays with the new supplier.
Nevels said the company plans to bring its services to the 15 states where electricity is deregulated — meaning consumers have the ability to choose their power supplier — in 2012. The company plans to launch in Texas and New York this month, he said.
Nevels said the company also plans to move into the business of helping suburban communities and businesses join forces to negotiate lower electricity prices. Essentially Power2Switch is trying to become the power industry's Costco, a place where suburbs buy in bulk on behalf of their residents or businesses band together to demand lower rates.
We'll be competing with other brokers, but we differentiate ourselves by how we leverage and use technology, Nevels said. Our service is not about the handshake and behind-the-scenes deal.