Solar Financier SunRun Snaps Up $18M Series B, Eyes U.S. Expansion

Facebook and SunRun, a San Francisco-based company that helps finance residential solar installations, don’t connect on many levels. But according to Rich Wong, a partner with Accel Partners — the venture capital firm that backed Facebook early on and on Tuesday will announce that it has led an $18 million investment round for SunRun — the biggest risk in both plays has to do with whether the startup will be able to achieve massive scale.


SunRun co-founder and president Lynn Jurich tells us the funding will support expansion beyond California, Massachusetts and Arizona, where over the last two years it has started providing homeowners with solar leasing options and what are called power purchasing agreements — SunRun owns, monitors and maintains the solar panels, and sells the electricity at a fixed rate after customers pay a $1,000 installation fee. Jurich declined to name specific target markets, but said SunRun is looking to enter some of the 10-14 states where “solar will make sense” within the next 2-3 years as a result of local subsidies, utility programs and electricity rates that will help bring solar closer to competitive pricing with conventional sources.

Asked if SunRun faces time pressure to expand into these new markets as a result of growing competition, government spending or new policies like the investment tax credit for solar installations that will expire in a few years — Wong told us he sees SunRun as facing more of an open field with a running opportunity. “There’s such a large opportunity to be grabbed, and SunRun already has a substantial lead,” he said.

According to Jurich, SunRun’s biggest competition comes from utility companies, which are also starting to set up financing programs for potential solar customers (startups like SolarCity are also entering the market). But Wong, whose firm has also backed thin film solar manufacturer GS Solar and a stealth-mode photovoltaic materials company, says he’s not worried about competition, implementation of the cap and trade system proposed as part of the climate bill, or the expiration of tax credits. “I’m trying not to be too Polly Anna-ish,” Wong said. Analysis of SunRun’s business has left him with the same basic question he had about Facebook back in 2005: Will the “team continue to execute,” growing the company “to its fullest extent?”

The context for this question is that one of SunRun’s founders, Nat Kreamer — who served at different times as President, COO and CEO of the company — left SunRun either just ahead or possibly at the start of negotiations with Accel and other investors. He left in March of this year, and negotiations, according to Jurich and Wong, began “a couple months ago.”

At this point, SunRun has about 1,000 customers, a $12 million round of Series A funding under its belt (Foundation Capital, which also joined the funding announced today, led that round), plus a $105 million commitment for project financing an affiliate of US Bancorp and deals with large solar installers including Los Gatos, Calif.-based Akeena Solar. With a total of $30 million in venture capital raised in the last year or so, funding, at least, shouldn’t be a problem.

Photo courtesy Flickr user MountainAsh