From pv magazine 06/23

Rable, a Dutch developer of pre-mounted PV arrays for flat rooftops, raised €2.5 million ($2.72 million) in May from Amsterdam-based venture capital (VC) fund Rubio Impact Ventures and Energietransitiefonds, a Rotterdam regional public fund.

That followed the €28.5 million of growth capital raised by Sweden’s Sunroof. The largest first-quarter investment was the €215 million of Series D cash raised by Berlin-based solar leasing company Enpal, according to consultancy Cleantech for Europe.

All these companies serve the growing residential and, in some cases, commercial solar segments. Notable recent investments are grouped by type of company and listed in the tables below.

Recently funded installation innovators

Recently funded BIPV and rooftop innovators

Will investor interest remain piqued? “My sense is that the energy crisis led to a bit of a mini-boom in startups meeting the need to master household energy costs by increasing the self-consumption ratio,” says Jenny Chase, a solar analyst at business intelligence company BloombergNEF. “But what happens when high prices recede? It is hard to differentiate. Is there a long-standing value proposition regardless of energy prices? Some startups will likely get acquired by utilities [seeking] to avoid developing software in-house.”

Jan Michael Hess, CEO of startup Ecosummit says that “high-quality companies that are generating results will be able to find new lead investors in up rounds.” Up rounds are fundraising exercises conducted by companies which have grown in value since their previous financing round. Referring to the German solar leasing business Hess backed in 2020, he says that “Sunvigo was able to attract new lead investors [in April] based on growth and financial results this year.”

Startup competition for capital is mirrored by investor efforts to buy stock in the “best companies,” Hess adds.

Julia Padberg, a partner at Amsterdam-based VC company SET Ventures, notes a “downturn in venture capital investments this past year in areas like fintech [financial technology] and blockchain. But energy is holding up. Our portfolio companies and startups in other segments are reporting record quarters and results. Successful ventures in our portfolio are, in fact, raising significant up rounds this year and a stable level of new investments are being made.”

Residential energy

Bernd Arkenau is managing partner at Münster-based eCapital Partners, the first external investor in German residential storage provider Sonnen, which was acquired by oil-major Shell in 2019. ECapital Partners was also the lead investor in 1Komma5’s Series A fundraising round in April 2022. Arkenau says that it makes more sense to invest in solar now than it did 10 years ago.

“Electricity is more expensive,” he says. “Environmental awareness amongst consumers is greater than ever. They are investing in electric vehicles, PV energy storage, and heat pumps.”

“[The 1Komma5 investment] fits our strategy to invest in founders seeking an edge in a high growth market and [the company] was founded by Sonnen alumni,” Arkenau says. “The Sonnen investment helped to learn about building tech teams and what to focus on in solar markets. It grew from 20 employees, when we invested, to 350 at the time of the acquisition and has grown tremendously since.”

Sonnen now employs 1,000 people, according to its website.

Earlier stage investments are also occurring. The 42watt business, a Munich-based online platform supporting homeowners planning energy renovations, has raised seed funding. “The goal is to reduce complexity for consumers,” says CEO Jörg Überla. “We are still at day one when it comes to what homeowners can do to optimize energy usage and expenses.”

In March, Berlin-based Solytic raised €2 million in a Series B funding round. Solytic and Berlin neighbor Kwest – a renewables installer software company – have a complementary solution for small and medium-sized installers.

“Installers have unique workflows and are trying to digitize their processes by using customer relationship management (CRM) software,” says Kwest CEO Robin Dechant. “Others are yoking Asana, monday[.com], and Excel into service but that is cumbersome,” he adds, referring to other workflow and project management solutions.

“We are trying to build out the features more quickly because of the current customer demand and the requests from potential customers,” says Dechant.

Steep growth

Growing companies with lighter, more aesthetic, or easier to install rooftop PV designs can raise capital from a mix of investor types. Swiss business dhp technology – which has developed a retractable solar “roof” popular with wastewater treatment facilities – raised capital last year through crowdfunding and a loan from the government-backed Swiss Technology Fund.

“Financing growth is not a problem,” says dhp co-founder and managing partner Gian Andri Diem. “We have delivered 16 Swiss and German projects since our third year in operation, with 35 more in planning. But I would say that finding skilled talent is a challenge. We have 29 employees and are currently recruiting.”

Lech Kaniuk, CEO and co-founder of Sunroof, which has installed 1,000 roofs in Sweden, Norway, Germany, Switzerland, and Poland, raised capital from growth and impact investors. “We see steep growth ahead,” he says, citing EU policy packages. “The Green Deal and RePowerEU initiatives, plus Europe’s long-term goal of energy independence, make it strategically important to have solar roofs.”

Exit signs

Sustaining the flow of capital to innovative companies in Europe also requires divestments, with “exits,” typically via initial public offerings (IPOs) or acquisitions. “IPOs can work,” says BloombergNEF’s Chase. “Both Energy Solar Tech and Otovo are quoted but I think corporate acquisition is the more likely route for startups that prove value.” Otovo went public in early 2021 on the Euronext Growth Oslo bourse and in January it transferred up to Oslo Børs, also part of the Euronext Group.

A variety of innovators have been acquired since 2019 (see table below). Energy Solar Tech SA went public on Spain’s stock exchange in December. SET Ventures has had several renewable energy-related divestments lately, including Depsys, a Swiss grid technology company; GreenCom Networks, a German digital solar and storage business acquired by US microinverter and battery manufacturer Enphase Energy; and Sonnen. “All of these companies were unlocking the clean energy transition with innovative technologies,” says Till Stenzel, venture partner at SET Ventures. “We’re proud to watch them continually reach new heights.”

From Ecosummit pitch to acquisition (2019-23)

Depsys, which was founded in 2012, was acquired last year by the Kraken business of UK clean energy supplier Octopus Energy Group. “Depsys is an example of how investing in digital is seven hundred times cheaper for utilities than traditional physical grid reinforcement,” says SET’s Padberg.

“My outlook on exits is positive, even in 2023,” says Andreas Schwarzenbrunner, a partner at Speedinvest. “It is widely accepted that solar will be critical for future energy supply. Prices of panels and systems continue to fall. More business models are born. It is possible to raise large-sized rounds for solar tech when the fundamentals are good. Technology risk is not like it was 10 years ago as the module industry has settled on silicon PV with gigawatt-scale manufacturing.”

Future opportunities

Speedinvest has three solar investments, namely Skyfri, a startup founded to optimize solar assets by former executives at Norwegian renewables developer Norsk Solar; Sunhero; and Kwest. He sees opportunity in business to business (B2B) software and solutions to address financial, operational, and grid- and market-expansion-related problems across the solar energy spectrum.

A maturing solar industry marked by an increase in solar generation capacity of all kinds creates demand for software, tools, and solutions. “The first generation of solar companies in Europe were panel manufacturers with very simple business models,” says Stenzel. “Now it’s much more about the services and software layer on top of that. It’s easier for a startup to enter on the software side of the energy business.”

“There are a lot of opportunities for specialized B2B software companies to create value with non-obvious digital solutions,” says Padberg.