A couple of years ago startup Sungevity set out to provide hassle-free services for homeowners who want to install solar electric systems. Looks like its strategy has paid off: On Wednesday, the company announced it has raised another $15 million.
The money will enable Sungevity, which has been serving California, Arizona and Colorado, to conquer states in the East Coast, company founder Danny Kennedy tells us. The $15 million is a Series C round, which hasn’t officially closed yet. Kennedy said more money might be added to the round but declined to say how much. Sungevity, based in Oakland, Calif., has raised more than $25 million since its inception.
Sungevity’s share of the residential market in California has grown from 0.4 percent to 2.9 percent between January 2009 and November 2010, Kennedy said. The gain reflected the amount of solar energy the company has contracted to install, projects for which the company has applied for the state’s incentive program. The company has sold or leased more than 4.7 megawatts of solar electric systems so far this year. Ninety-five percent of the company’s business come from leases, Kennedy said.
The company is able to boost sales thanks to the software it developed to streamline the sales process, Kennedy said. The software allows Sungevity’s staff to do most of their work online, from providing cost estimates to designing each system to suit a particular rooftop. Consumers can ask for a quote using Sungevity’s website and get an estimate in costs and savings via email within 24 hours. The company uses satellites images to help determine the best location and orientation of the solar electric system on the rooftop. Sungevity’s employees then follow up with phone calls to hopefully close the deal.
By providing the estimates and system designs online, Sungevity can avoid the expenses of site visits before customers agree to buy or lease solar electric systems. Some installers offer a quote via an online calculator but often still need to visit the homes before they offer firm cost estimates, Sungevity said. Because consumers tend to shop around, many of these site visits could lead to zero sales.
“It’s a low-pressure sales process,” Kennedy said. “We offer a Netflix-like experience, and we are going to accelerate the adoption of solar.”
The model also allows Sungevity to expand its services without having to set up field offices in every regional market. The company hires local installers to do the installation. It hopes to expand the services into northeastern states such as New Jersey next year.
The approach also sets it apart from some of its competitors. SolarCity, in Foster City, Calif., for example, promotes itself as a full-service provider who, in addition to selling and designing solar electric systems, also owns its own crews to do the installation. San Francisco-based SunRun, meanwhile, works with local installers to design and set up the systems.
Sungevity’s projects are financed by U.S. Bank, which committed $24 million to Sungevity’s projects earlier this year. The $24 million is a tax equity fund, which means U.S. Bank gets to take advantage of a federal tax investment credit by putting up cash to finance solar electric installations. The tax credit is worth 30 percent of a project’s cost. Kennedy said he’s seeing more tax equity investors in the market now than two years ago, when the financial market collapsed.
Projecting financing money is separate from the funds raised by Sungevity to run its operations, such as the $15 million announced Wednesday. Investors in the latest round included Greener Capital, Firelake Capital and Brightpath Capital Partners.
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The photo,courtesy of Sungevity, shows a system donated by Sungevity to the president of Maldives.