Texas Cleantech Startup Acquires Chicago Rival, Boosts Energy Marketplace

Choose Energy, a suburban Dallas online energy marketplace, has acquired a Midwest competitor.

The cleantech startup, which is based in Plano, TX, announced Monday that it had purchased Power2Switch, another online energy marketplace based in Chicago that had recently expanded its operations into New Jersey, Texas, Ohio, and New York.

“We will now be able to offer more choices to our customers while expanding into new markets and working with additional service providers,” says Jay Webster, president of Choose Energy.

Terms of the sale, which was completed September 26, were not disclosed.

Choose Energy, founded in 2008, had served only the Texas market until last year when it began expanding into a total of eight states today. Its online comparison shopping site for electricity in deregulated energy and gas markets is live in New York, Ohio, Pennsylvania, Illinois, among other states. Webster says the startup plans to have a presence in each of the 19 deregulated energy states and 22 deregulated gas states within a year.

“In Texas, there are between 220 and 250 energy plans that are available,” Webster says. “That’s a massive fragmentation of the Texas market. We are here to demystify that and make it easy to make a choice.”

In March, Choose Energy announced it had raised $4 million in Series A funding from Kleiner Perkins Caufield & Byers and Stephens Capital Partners. The company has a total of 16 employees, including two Power2Switch executives who will join Choose Energy.

Power2Switch was founded in 2010 by Seyi Fabode, who will leave the company after the transition. The Chicago startup had raised a total of $1.3 million in venture capital from OCA Ventures, New World Ventures, and Chicago Ventures, as well as Troy Henikoff, a managing director of Excelerate Labs, which is now Techstars Chicago. Power2Switch was a member of Excelerate’s 2011 class.

The two startups have more than cleantech in common. Both Fabode and John Tough, Choose Energy’s business development director, are graduates of the University of Chicago Booth School of Business. Tough also once worked for Hyde Park Angels in Chicago, one of Power2Switch’s backers.

Webster took over as president last year, with Choose Energy’s founder Jerry Dyess staying on as CEO. Previously, Webster had been in tech and operations in the online advertising industry, including serving as CTO at BlueLithium in Sunnyvale, CA, which was acquired by Yahoo for $300 million in 2007.

Webster says Choose Energy looks to best practices in other industries as it creates its online energy market. “Travel does a terrific job of rolling up all of the available options for the customer,” he says. “Also, a portion of the Texas energy market looks like a cell phone plan with early termination fees and contract lengths.”

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