Solar service provider Sungevity underwent some serious expansion in 2011 as it began to target the East Coast and overseas, and lined up Lowe’s as an investor and partner. And now following that growth, the Oakland, Calif-based startup has started raising a new funding round of $40.8 million, and so far has raised around $12 million of that, according to a filing.
That close to $41 million is substantially larger than its previous rounds. Sungevity raised a Series C round of $15 million back in December 2010.
Scaling up its operation and finding new opportunities beyond its initial pursuits will become more critical – and require more capital – as competition in the residential solar business intensifies and attracts more companies who can now see a path to success thanks to the trailblazing work done by earlier entrants.
Sungevity, backed by investors such as Brightpath Capital Partners, Firelake Capital Management and Greener Capital, was founded in 2007, around the time when residential solar services were starting to attract more interest from investors. Startups that have grown to become major players in the business include SolarCity, which was founded in 2006 and SunRun, which started in 2007. Other startups that have cropped up in this sector and received private equity include Clean Power Finance, Solar Universe, Brightergy and Solmentum.
These startups have different business models, however. Sungevity handles sales and marketing, solar energy system designs and financing deals, but it farms out the installation work to contractors. In contrast SolarCity does all those in-house.
The ones that are able to experience faster growth do have something in common: they are able to line up funds from banks or other investors to offer leases or other financing deals so consumers can then put zero or some money down, get a set of solar panels on their rooftops and pay a monthly fee for electricity that should be lower than what they would pay for the same amount of energy from their utilities. Companies that have invested in this type of solar financial services offered by startups include banks such as Bank of America and Rabobank and Google
The residential solar market has grown large enough to entice firms that are long-time consumer service providers. Vivint, one of the country’s largest home security companies, got into the solar market last year. Utilities such as NRG’s two subsidiaries, Green Mountain Energy and Reliant Energy, also now offer residential solar leases, and so does Constellation Energy, which launched a program last fall.
Some solar service providers have expanded what they offer in order to set themselves apart from the growing number of rivals. SolarCity also installs electric car charging stations and could package charging stations with solar panels for those who want a cleaner power source to run their electric vehicles. Sungevity’s move overseas means it will provide software and other services to companies – the first one being in Amsterdam.
Photo courtesy of Sungevity