The idea behind vertically integrated companies is that each of its subsidiaries produces a part of the value-chain that, when connected together, delivers a stronger force. Think of steel barons owning mines, mills and railways, or American Apparel controlling production, distribution and marketing. For the smart grid, there’s a certain venture firm that’s got investments in enough pieces of the grid that, while the startups aren’t technically vertically integrated, it means the venture firm’s got enough players to cover the entire length of the smart grid network, which can be mighty attractive in a utility deal.
The venture firm is Foundation Capital, and an announcement this morning from Foundation-backed Control4, a home automation firm, illustrates how a vertical integration approach to smart grid plays is paying off for the investors. Control4 will supply its home energy management products for Texas utility Bluebonnet Electric Cooperative’s smart grid project, according to the release this morning. Control4’s technology will connect with software by eMeter to supply smart meter data management, and it will also connect with Silver Spring Networks smart grid networking component.