Pricelock raises $12M to control fuel costs

March 15, 2011 11:06 AM
Conrad Egusa

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Pricelock, a company offering online fuel hedging and price protection for businesses in the U.S., has raised over $12 million in second-round financing.

Pricelock is the first company to use technology and commodities knowledge to bring predictability to fuel prices. By combining demand, Pricelock wants to allow small and medium-sized businesses to control fuel costs in ways that had only been obtainable earlier by larger companies.

Says CEO and Founder Robert Fell, “Pricelock has demonstrated the economic benefit of online fuel price protection programs to U.S. businesses of all sizes, especially small and medium-sized companies.”

The company also offers Carbonlock, which is a patented “green fleet” program that allows fleets and businesses to acquire certified carbon offsets and become carbon neutral.

In this round, Pricelock, whose investors already include Goldman Sachs and Artiman Ventures, received new investments from Barclays, RenaissanceRe Ventures, and Travelers Insurance. Artiman Ventures participated as well.

Pricelock is headquartered in Redwood City, California and was founded in 2006.

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Metallgesellschaft lost over $1 billion in 1993 when its US subsidiary offering hedging services went belly up. They were offering price protection to independent gas stations and fleet providers. When the business grew, they were always long in the futures market, and traders killed them when it came time to roll over contracts. Of course, MG at one point had over 50% of all the outstanding gasoline contracts on the MERC. I hope these guys know what they are doing, and don't try to offer protection based on hedges they can't sustain. If all they are doing is marketing futures contracts to small and relatively unsophisticated businesses and taking commissions, there isn't much value added there. If they take on risk, offer synthetic hedges, or longer term positions (i.e. longer duration than what is readily available and affordable on the commodities exchanges) they had better be well compensated for the risk, and have a bank ready to underwrite them – not like Deutsche Bank – if the market goes against their hedge and they have to post collateral. MG was asked to post millions of collateral against their hedges, which were hedged against uncollateralized contracts from their small retail customers. If they had been able to hang on, they would have made money, probably, but if you are long and the market goes against you, you better have deep pockets to be able to wait it out. How a venture backed company with a $12 million round plays in this game I have no idea.