It may seem like SaaS is everywhere, but there’s one sector that’s been slow to adopt it — manufacturing.
By itself, manufacturing drives almost 11% of the U.S. economy, contributing $2.77 trillion to GDP as of Q2 2022. All that activity also uses a lot of energy and produces a lot of greenhouse gasses. But if manufacturers could wring out extra production from their existing factories, they could go a long way to trimming the sector’s carbon footprint.
SaaS startup Guidewheel’s co-founder and CEO Lauren Dunford had previously worked in manufacturing, and she knew just how inefficient plant operations could be. When equipment broke, it was often logged on paper or in spreadsheets, and much of the collation and analysis was done manually. Not only did these tasks take up the plant manager and maintenance staff’s valuable time, they also slowed production because machines were down longer than they needed to be.
Existing systems were “heavyweight and not a perfect fit for our size of operation,” Dunford told TechCrunch. That, along with the potential for energy and carbon savings, was what drove her and her co-founder Weston McBride to start Guidewheel, which allows factories to connect and monitor any piece of equipment from the cloud. TechCrunch has exclusively learned that the company has closed a $9 million Series A-1 led by Breakthrough Energy Ventures.
“Manufacturers care about whether their equipment is running as it should, because they only make money when their equipment is running and producing,” Dunford said.
“Of course, we’ve seen more and more customers who really care about the energy side. Two reasons there: One is the pressure from investors or customers, or the ability to open up new channels. There’s a lot of excitement. The second is that increasing cost pressure — energy is a big cost for a lot of the manufacturers we work with — has created another tailwind,” she added.
Guidewheel doesn’t lead its sales pitches with the energy savings. Usually, just being able to minimize equipment downtime is more than enough to get customers on board. After that, Dunford said companies continue to find ways to wring more out of their equipment, improving things like runtime, production costs or overall equipment effectiveness by 10%–20%, sometimes more.
In a sense, the energy savings are a side benefit of the system, though very much an intended one. That appealed to Matt Eggers, a partner at Breakthrough Energy Ventures who led the firm’s investment into Guidewheel.
“I really like these investments in companies where people are buying the product for some other reason and it’s bringing the sustainability benefits for free,” he told TechCrunch. Every 10% reduction in energy use in manufacturing could reduce carbon emissions by one gigaton, Eggers added.
But the direct energy savings were just part of Guidewheel’s appeal for the BEV team. What Eggers and his colleagues found particularly interesting was Guidewheel’s ability to add manufacturing capacity without having to build new factories or install new equipment. “That’s a lot of eliminated cement, steel and new machines. That’s a huge amount of emissions that you don’t need to create,” he said.
It also doesn’t hurt that the startup is working in a relatively untouched sector. “As an investor, there’s not many horizontal SaaS opportunities left,” Eggers said. Many new entrants are playing on variations of a theme, like SaaS for doctors’ offices or HVAC contractors. “Some of these can be pretty big markets, but this is ‘let’s build SaaS for manufacturing,’” he said.
Guidewheel collects data from small, industry-standard IoT sensors attached to a factory’s equipment. The sensors can be installed on power distribution boards, power cables or even inside the equipment. The company works with customers to determine the level of detail they’d like to start with and goes from there.
Those sensors then read electrical current levels and report back to a hub (also widely available) that’s connected to the cloud via ethernet, Wi-Fi or LTE. Once the data is in the cloud, Guidewheel’s software crunches it as it streams in — for example, it may summarize machine uptime and alert plant managers and maintenance techs when something goes awry.
The company can also provide historical reports so plant managers can track things like overall equipment effectiveness, energy use and more. They can also use it to plan expansions more efficiently, evaluating whether they actually need new equipment.
Guidewheel’s pricing follows a SaaS model, though instead of per-seat fees, customers pay based on the number of sensors they have installed in the plant. Dunford said her company aims to have their system pay for itself in the first month customers use it and have any additional savings from lower energy use or greater operational efficiencies accrue to the customer.
The new $9 million will go toward adding new features for customers, from real-time scoreboards to throughput forecasting. One screen she showed me looked like a heartbeat on an ECG — it was a graph of power surging through a machine, an electric illustration of the start and stop phases of a cycle needed to produce a widget. With such information, managers could start tracking production rates in real time.
While much of Guidewheel’s initial sales pitches were focused on medium-size manufacturers, Dunford said there’s been interest from large ones as well because a lot of their equipment lasts for a long time and isn’t connected to the cloud.
“They’re realizing that the same approach for the most advanced 1% of their plants is not the approach that’s likely to be perfect for the vast majority of their plants or asset bases,” she said.
Ten percent here and there may not sound like a lot, but when you consider the scale of the industry and how energy- and materials-intensive it is, improving manufacturing capacity and efficiency could have an outsized impact on reducing emissions.
“It’s hard to decarbonize all that manufacturing because those machines and factories are just going to keep operating. One of their customers has 100-year-old machines, and they’re connected to Guidewheel,” Eggers said. “If you can make them run a little bit more efficiently or extract more out of those same machines, this is a great way to do it.”