Not many companies offer to cover the cost of their service for customers upfront. But for UrbanVolt, the Dublin-based energy-saving LED lighting company, footing the bill is the business model.
The company recently announced a €5 million investment for energy-efficiency projects for businesses in Cork. Last month, it pledged to replace one million lights across Irish businesses with no upfront costs.
Rather than asking its clients to pay to retrofit its lighting, UrbanVolt invests in the LED lighting and then splits the savings with the business. These cash savings can be up to 50% for the business.
“Nobody believes in the savings unless they have a number,” said Kevin Maughan, chief executive and co-founder of UrbanVolt.
“If we can stop businesses paying out a huge cost upfront, that actually releases cashflow into the business. The way I looked at it is that it’s the cash flow that’s important, not the asset.”
To date, UrbanVolt has completed 78 light fitting projects and has another 302 leads.
Its investors include Leinster and Ireland rugby star Jamie Heaslip, and BVP Capital, which previously invested in Yelp and LinkedIn. There are others, but those individuals and the amounts invested are kept under wraps.
“We’ve done very quiet fundraising. We don’t like to raise tension around fundraising. It detracts from the message of the business,” said Maughan.
With plans to boost its staff count and enter the British, European and US markets by next year, the company’s future is bright.
“We don’t see any barriers for us. There’s potential to do one billion retrofits in the Irish market in the next ten years alone. In Ireland, there’s close to 150,000 commercial buildings, so we see this as a huge growth market,” said Maughan.
“Then when you look at the UK, there’s a 100 times bigger commercial market. Over there and in the US, the numbers start getting quite big.”
While UrbanVolt has its sights set on expansion overseas, it had a minor setback following Brexit when the value of the two British contracts it won fell in value.
“We don’t have enormous margins, so we said we can’t take that risk yet unless we moved into mainland UK,” said Maughan.
Germany and Austria are also on the cards, as UrbanVolt seeks to tap into an LED market with an estimated value of €30.5 billion, according to the market intelligence provider TrendForce.
Founded last year, UrbanVolt is the brandchild of Maughan, a former Merrill Lunch investment banker and founder of bio-technology company Novaerus, and his co-founders Graham Deane and Declan Barrett.
Barrett had just sold his property management business when he took an interest in LED lighting solutions.
“He had put them into a number of commercial properties and he had made enormous savings. Then we looked at the technology and found that it’s at a point where it’s very stable. I couldn’t see why investors wouldn’t want to share in this saving,” said Maughan.
Maughan decided to step away from his chief executive role in Novaerus, which had grown to a valuation of $40 million. Within months, he secured a contract with the Brandwell Group, the accessory giant that supplies Gionni and Penneys.
“They had particular needs because for them, lighting is very important when they’re taking stock off shelves. When there’s failure in the lighting, they would see it in their operation,” said Maughan.
The next big contract was with Bord Gais Energy, a three year deal that saw UrbanVolt becoming the preferred lighting supplier to its 30,000 commercial customers.
“We talked to Bord Gais very early in our business development. They understood what we were trying to do. A lot of people didn’t understand it,” said Maughan.
“You have to have a longer-term vision for this kind of business. It’s not a wham bam, we’re just closed a deal. It’s €100,000 and we trouser the money. We sit around and wait five years for it to come through.
“It’s a partnership. It’s slow.”
UrbanVolt’s customers range from a 3,000 square foot Spar shop to a 1 million square foot warehouse. As long as the company is at a certain scale, the company will invest, Maughan said.
“We like big places that they want 500 of the same industrial lighting fixture. They just don’t want to be dark,” said Maughan.
“We don’t do jewellers where they need the diamond to sparkle in a particular way, or we don’t do restaurants because they need the colour temperature to be very precise. It gets messy.”
The customer Maughan would like to sign up is the HSE, but attempts to coax the state body as a client have been unsuccessful to date.
“We estimate that they could make 50 plus energy savings, but it’s very hard to get them to engage. They keep saying they don’t have any money, but we’re happy to invest all of the money to commercially fit all of the hospitals. But there doesn’t seem to be a button on the till for our model,” said Maughan.