Entrepreneurs and investors converged in Denver, Colo. on Nov. 3-4 for the National Renewable Energy Laboratory (NREL) Industry Growth Forum. Speakers explored the potential for reshaping revenue streams and finding alternatives to venture capital financing structures.
The forum hosted 30 entrepreneurs who pitched their startups to a panel of strategic investors, venture capitalists, incubators and accelerators. The primary purpose of each session was for investors to provide feedback on ideas presented and suggest ways to improve the businesses.
Richard Adams, director of the Innovation & Entrepreneurship Center at NREL, challenged the crowd to bring innovative business models to bear to introduce renewable technologies to the market.
“I often get asked how much is possible by members of Congress,” Adams said. “I now turn back the question back on them: ‘How much do you want?’”
Reimagining Revenue Streams
A good example of this was an innovative company called Powerhive that builds microgrids in rural Kenya. It was the first company to be authorized by the government to sell electricity other than Kenya Power and Lighting Company.
Because the vast majority of the company’s customers live beyond the reach of the grid and beneath the poverty line, they have no access to credit. Instead, Powerhive offers a prepaid service that customers pay into using M-Pesa, a popular mobile payment system in Kenya.
Powerhive then remotely switches on a connection to its microgrid powered by solar panels with lead-acid battery storage to provide dependable power at any time of day.
These microgrids are modular and mobile. Hence, they can expand or contract capacity according to demand. They can also be relocated when the national grid connects to the village.
At the core of Powerhive’s business is a software system that was developed to identify the ideal locations to install microgrids and control the systems remotely.
During his pitch, Powerhive Founder and CEO Christopher Hornor said the company makes money in several ways. Its company subsidiary in Kenya develops projects using Powerhive software, for which it charges a fee. It then sells electricity to customers and the software helps support the subsidiary. The company also sells some software tools to other developers.
Dropcountr, a software service for water utilities, is another startup finding nontraditional ways to generate revenue.
The company tracks water consumption for each water meter in real time, applies advanced analytics to the data stream, and delivers critical data to the utility’s customers instantaneously. During his pitch for Dropcountr, self-identified ‘Chief Drip’ Robb Barnitt said, “Right now, we’re looking at three potential revenue streams. There’s the software as a service that a water utility would pay us to use. Then, we have survey data suggesting that there is willingness to pay for a premium version of the app, especially related to leak detection. And finally, there’s the possibility to market associated products.”
Seeking Alternatives to Venture Capital
While the forum featured entrepreneurs pitching to primarily venture capitalists and strategic investors, some of the companies that presented are also considering other alternatives to fund growth for their enterprises.
HOMER Energy, for example, has bootstrapped its way to profitability without an equity raise. It makes industry-leading microgrid design software. (Its acronym stands for ‘Hybrid Optimization of Multiple Energy Resources.’)
When asked what next steps HOMER Energy is considering, Andy Kruse, vice president of business development, said, “HOMER Energy is a small yet cash-flow-positive and profitable company. So there isn’t the pressure to do something now. Venture capitalists have their place, but they will take their share and then some. We are looking into a variety of vehicles from organic growth to equity investors. While it’s not on our radar at the moment, we may even consider crowdfunding. The only ones not on our list are venture capitalists.”
Hornor said Powerhive is thoroughly pleased with the service from HOMER Energy that it uses for installation design.
Offering Lighting as a Service
Teslatricity, an LED lighting manufacturer that claims to offer lighting solutions at the ‘lowest cost per lumen,’ is both offering a new revenue model and thinking outside the venture-capital box.
During his presentation, Teslatricity’s Co-CEO and Co-Founder, Damir Perge, discussed the company’s offer to provide lighting as a service. In this model, customers would pay a monthly service fee and the company would design and maintain an optimal lighting system for the customer.
As a part of its expansion plans, the company is also planning on building a new factory to manufacture its products at greater scale and seeking equity financing to do so. However, Perge, a former venture capitalist, said venture capital funding isn’t the only option to fund this project. “If we don’t get equity financing, we’re going to finance the factory with purchase orders. I borrowed this idea, actually, from the semiconductor industry.”
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