"If LED lights save you so much money - then why don't they pay for themselves?"
This is the question that was asked when we three friends sat down together for a quiet pint one long winter evening in 2014. We asked a lot of questions - but that was the one which stuck in our heads for months afterwards. Sometimes the simplest questions are the most difficult to answer.
From a customer's perspective, what we saw was a disjointed, noisy market with lots of participants offering all sorts of LED lighting products and consultancy services. But there was one common thread - everybody wanted to be paid before the customer experienced any savings. This old-fashioned approach to business was clearly the barrier to the widespread adoption of commercial LEDs.
So we decided to do something about it.
After all, most businesses just want it not to be dark, so why invest an inordinate amount of time, energy (pardon the pun) and money in lighting when all you really need is light?
Behind every environmental problem there is a faulty business model
So we started looking at how we could fix a business model which has been around since Edison invented the lightbulb in 1879 - and which hasn't been improved upon since. At UrbanVolt we believe that there can be no widespread adoption of sustainable energy without first creating a sustainable financial model, and our thesis is pretty simple:
- LED lighting saves 75%+ in energy costs - creating immediate & long term cash flows
- Long-term cash flows underpin the world's most successful companies - so why not ours
- The savings are so big that they can provide a return for both end users and investors
So how could we build a platform to deliver LED lighting for no upfront cost?
From that foundation and from our original base at DCU Alpha, the university's innovation campus, we began to construct UrbanVolt's business model - Light as a Service
But while the question may have been simple, building the solution for our clients wasn't easy.
It took a year – fuelled by many late nights, gallons of coffee, and debates with lawyers and accountants – to build a world class financial platform which would deliver LED lighting to businesses for no upfront cost.
So how were three friends who had no background in the lighting industry able to do this? Well, it was exactly because we had no background in lighting. Instead of looking at the problem the same way as everyone else in the industry, we took a step back and took an alternative view.
We can not solve our problems with the same level of thinking that created them- Albert Einstein
Combining our skills from corporate finance (Kevin Maughan CEO), property management (Declan Barrett CCO) and logistics (Graham Deane COO), we ignored what everyone else was doing (selling lights) and set about building a financial platform which would underpin the business and deliver LED lighting for no upfront cost.
While others in the lighting industry were fixating on the light fittings and were drowning their clients in technical information while chasing a "sale", we looked instead at the cash savings which could be delivered to clients. Because LED technology has matured and the drop in energy usage is proven, we looked at the 75+% in savings and used that as the key for delivering these savings to everyone from day one.
Bringing Wall Street to Main Street
Our clients are smart - you want to use your cash to grow your business, not chase savings. And our investment partners love long-term and predictable cash flows from energy projects like yours, but it is expensive for them to interact directly with you. Enter UrbanVolt and our unique Light as a Service model.
Instead of "selling" lights, we make sustainable easy by bundling our client projects into one growing and diversified "investment grade" portfolio of energy efficient projects. This diversifies the financial risk and reduces the transaction costs of the LED lighting projects for our institutional investors. They love the simplicity of our award winning model and our one-page agreement makes it easy for everyone.
The more projects we do, the more we drive down costs for everyone. This in turn accelerates the adoption of even more projects, driving overall costs down further for everyone. Now that's what we call a sustainable business model.
The only truly sustainable energy is energy which has never been consumed- Kevin Maughan, CEO of UrbanVolt
Fast forward a few short years from that original conversation, and we have achieved what we set out to do - create an easy way for clients to access savings via LED lighting retrofits.
Along the way we have outgrown our office (twice), been awarded for our innovative business model (Bank of Ireland Startup of the Year), signed a deal with Bord Gáis Energy to become their exclusive lighting partner to their 30,000+ commercial clients, underwritten our products with Munich Re (one of the biggest reinsurance companies in the world), and we have begun our international expansion.
In our first few months of operation we saved Irish businesses millions of euro. Now, we're looking forward to saving hundreds of millions for businesses around the world - without ever asking for a penny upfront.