Ofer Raz was nearly run off the road by a vehicle being driven by an inexperienced teenage driver. Shaken, he told his friend Hod Fleishman about the near-miss, and the two began to investigate whether they could predict which drivers were more likely to be involved in crashes.
"We had to focus on the issues that really impact safety," Raz says. "It took several years to perfect the algorithms and what we needed to measure."
That research was the catalyst for GreenRoad , formerly DriveDiagnostics, based in Redwood Shores, Calif. Founded in 2003, GreenRoad works with individuals and companies to improve driver behavior to reduce crashes, improve fuel economy and reduce vehicle and fleet environmental impact and operating costs. Its offerings, part of a bundled subscription service, include an in-vehicle device that offers real-time coaching to drivers and helps customers spot driver deficiencies--including speed, handling and emissions--so that they can be corrected. Customizable web-based and e-mail reports give fleet managers individual trip details, risk analysis and coaching suggestions to help drivers improve.
GreenRoad puts the annual cost of vehicle crashes at $235 billion in the U.S. alone, with $350 billion more spent on fuel. A 2008 report by the American Automobile Association put the crash total at $164.2 billion. GreenRoad CEO Dan Steere estimates that a company with a fleet of 1,000 vehicles realizes savings in excess of $1 million per year by using its service, which has attracted clients such as Ryder, Ericsson, LeFleur Transportation and the UK Ministry of Defence since its introduction to the market in 2007.
But with growth comes the need to scale operations, and that takes money, Fleishman says. In May, GreenRoad secured $15 million in growth funding--making its VC funding total just shy of $40 million--in a deal led by DAG Ventures, with participation from existing investors at Benchmark Capital, Virgin Green Fund, Amadeus Capital and Balderton Capital. DAG's managing director, Nicholas K. Pianim, also joined the company's board of directors.
Pianim says the DAG team was impressed by the ability of the company to demonstrate a clear ROI to fleet customers. "Within a year, their customers see a reduction in crash, fuel and emission costs that more than pay for the service," he says.
Although it might seem as if the DAG team threw another wad of money at a clean-tech company, Pianim says, it was also struck by the experience of GreenRoad's management team. Each member, including Steere, is a veteran with more than 20 years of experience. The company also has shown quarter-over-quarter revenue growth, even in a tough economy.
The new investment helped GreenRoad support research and development and pay for new sales and marketing efforts. It also helped create bigger internal architecture to service customers, including moving to a larger hosting center and expanding reporting functions so that the company can service bigger customers.
But fast-growing companies often find that once it spends money on expansion, it soon needs more. Those improvements to sales efforts, product offerings and infrastructure--driven by the common management goal Pianim cites to "see GreenRoad used in every commercial bus or truck"--attracted a new investor. In February, GreenRoad finalized a $10 million venture round with Generation Investment Management for expansion and product development.