The energy renovation market is clearly at a turning point, and the European need is colossal:
To meet this explosion in demand, it is necessary to accelerate investments it is paramount to accelerate investments in the decarbonization of our economies. Energy efficiency is clearly a hot topic for venture capital funds, and we will therefore explore the different trends and start-ups in the market.
The energy transition of the real estate sector must involve tech solutions aimed at implementing energy renovation projects, a problem that renovation start-ups address.
In the market, there are significant pure player actors that enable and facilitate the implementation of various energy renovation projects: solar, insulation, heat pumps, HVAC, etc.
Structurally, these are economic models that generate significant EBITDA. For example, Effy is a start-up that has been self-funded for over 15 years and raised a €20m Series A round with Felix Capital in March 2023 at a turning point in the renovation market. In Germany, 1KOMMA5°, founded in July 2021, has just become a unicorn by raising €430 million in Series B led by G2VP, a California-based VC fund.
At XAnge, we’ve noticed that the heat pump market is growing rapidly due to its energy efficiency. From an ecological point of view, the heat pump is increasingly powered by green electricity, with up to 90% reduction in CO2 emissions. From an economical point of view, the heat pump saves up to 70% on energy savings compared to the gas boiler.
In Germany, the heat pump market increased by more than 50% in 2022, so renovators need tools to manage these complex renovation projects. The Danish start-up Lun Energy, after one year, raised a Seed round of $11.2m in March 2023 to simplify the audit, financing, and design of a heat pump installation/maintenance project.
There are also SaaS solutions that manage all processes for small and mid-sized construction enterprises, a TAM of €6bn+ is addressed by Vertuoza, a start-up in the XAnge portfolio, created in 2019 by Dominique Pellegrino, Antoni Di Filippo, and Kevin Vermeulen.
The solar panel market is an essential component in energy renovation. Whether for individuals or businesses, it provides strong independence in accessing electricity, particularly in the context of rising energy prices. Notably, in 2021, total electricity production reached 522.9 TWh in France, of which 23% was contributed by hydro, wind, solar, and biowaste.
In the Hardware + Software segment, a start-up like Beem Energy announced a €20m fundraising in May 2023 to offer solar panel kits, which are particularly easy to install, and a tracking application. They meet a significant need because “The International Energy Agency” forecasts that up to 2.2GW of residential PV will be added in Europe in the next 3 years, representing 1.7 times the current installed capacity. Also, the German start-up Sunvigo raised a €12m Series B round in April 2023 to scale its photovoltaic panel installation solution in Europe. And at XAnge we’ve been a precursor in this market, investing in start-up Elum Energy, co-founded by Cyril Colin, providing ePowerControl technology: an Energy Management Systems (EMS) for renewable energy, storage, generators and other distributed resources.
However disparities do exist, for example, in France, the market for PV panels in residential homes is relatively immature with 100k homes equipped (out of a total of 15M private households in France), compared to more than 1.5 million in Germany or 800k in Italy.
Solar panel installers need software to carry out their projects and increase their sales. In the US, Aurora Solar, a start-up valued at €4bn+ and which raised a €200m Series D round in 2022, created the operating system for solar panel installers. Accelerating sales cycles and designing photovoltaic panel installation/maintenance projects is also what the French start-up Solteo is launching.
Ecoligo has distinguished itself within the investment sector by offering a “crowd-investor” solution to finance photovoltaic panel installations in emerging countries. This allowed them to raise a €10m Series A round in 2022.
There are many players in the Hardware &/or marketplaces segment to meet the demand for solar panels. Sunology, a start-up from Nantes (France), raised €10m in May 2023 to support its growth in the sales of ready-to-use solar panels. Sunhero, a German start-up, raised €10m in March 2023 to help individuals design their solar panels and plan their payment.
In France, energy renovation financing projects are largely driven by public financing sources (MaPrimeRenov’, CEE, regional subsidies, TVA reductions, etc.). However, there are two problems: the processes for accessing these financing sources are tedious, and the remaining balance after subtracting subsidies is too high for individuals (bank loans, installment payments, etc.).
Financing is, therefore, a central issue in the renovation market, and a start-up like Heero addresses these two important problems, and so does Drapo, which enables renovators to incorporate subsidies into their quotes.
At XAnge, we’re convinced that Financing will undoubtedly be an issue that will attract many entrepreneurs to facilitate access to energy reductions.
While numerous solutions are already available in the current market, fulfilling the substantial demand requires granting employment opportunities to the upcoming generation of energy renovators, in order to renovate more than 700,000 homes a year by 2050 (in France). Additionally, demand for jobs in the energy transition market will increase by over 150% by 2030 according to ADEME, but over 70% of these jobs are already in high demand.
To address the employment problem, the start-up Kolverr, created in March 2023, positions itself as a career platform for jobs in the energy transition space. There is also La Solive, which raised a pre-seed round of €1.5m to become the school of energy renovation jobs.
The price of energy is closely linked to the management and comparison of energy supplier contracts. For example, Papernest positions itself as the management solution for all contracts and subscriptions linked to home and raised a €10m Series A round in 2017.