Swedish energy startup Elvy is gaining traction. Just three months after announcing its $3.5m pre-seed round, the company has at least $20m in equity on the table — without actively fundraising — according to two people close to the company.
Elvy’s pitch? It manages all aspects of a home’s energy systems — from installation and maintenance of solar panels, heat pumps and batteries to grid management — for a fixed monthly fee of around SEK 2,500 (€230) over 15 years. Cofounder and CEO Johan Outinen says that on average Elvy reduces customer energy costs by 20% — which can go up to 50% in some instances.
But why would anyone sign up for a contract that long to save just 20% on their electricity bill?
“Customers shouldn’t have to think about energy systems,” Outinen tells Sifted on a visit to Elvy’s office, a converted apartment in an upscale part of Stockholm.
“What we’re trying to do is similar to what we’ve seen in other industries — like telecom, for example. Remember how we used to pay per call or text message? Now it’s all flat rates. Same with Spotify or Netflix. People want easy access.”
15 year contract
Elvy makes money through energy arbitrage — storing electricity in home systems when it’s cheap and selling it back to the grid when it’s expensive.
Customers leave all decisions of which solar panels, heat pumps, and grid interaction to Elvy. In turn, Elvy lowers costs by buying equipment in bulk and partnering with local installers.
The 15-year contract covers energy use, equipment and maintenance. After that, the system belongs to the customer. If the customer moves house, they can transfer the contract to the new owners or buy out the hardware.
While a 20% saving may not match the claims often made by solar and heat pump startups such as 1Komma5, which claims that customers can reduce their electricity costs by up to 80%, context matters.
Subsidies for installations on solar for example have been proposed to decrease in both Sweden and Germany, and upfront costs can reach tens of thousands of euros.
“The industry has been incredibly unhealthy,” says Outinen. “They’ve sold overly optimistic projections, claiming you’d get rich by installing this stuff. It’s not responsible — and it’s often pushed on people who don’t know better.
“The customer doesn’t know the energy market. We tell them: this isn’t sexy, but it’s a long-term cost-saving measure. We’re not going to promise you’ll get rich from it.”
More than doubled its customer base in three months
When Sifted last spoke to Elvy in February, it had 150 customers. That figure has since more than doubled to 350, and the company expects to hit €23m-28m in annual revenue this year.
“We’ve been on the market for just over a year, and things are going incredibly well. We’re the only ones doing this,” Outinen says. “It’s a complex, capital-intensive business model.”
Most of the money Elvy has raised is debt. Two months ago, it announced a €150m debt raise alongside its $3.5m equity round. Outinen declined to confirm details of the company’s next round but says more equity would help fund international expansion.
“Next year we’re likely to take our first step into the German market. It’s larger, and the need is greater.”
Sweden’s energy costs are much lower than Germany’s, he says. “If our value is strong in this market, it’s even stronger in Germany,” he says.
While Germany had some of the highest energy prices for consumers in the second part of 2024, Sweden’s energy costs are way below the European average.
He also says competitors in Sweden and Germany are trying to reverse-engineer Elvy’s model.
“It’s a tough nut to crack. It involves a lot of risk. If you’re a big company, it’s not easy. You need someone with a completely different perspective.
“You have to build your own system — there aren’t many off-the-shelf solutions. But that’s actually a relief for us. We don’t manufacture hardware or store it, and we’re not the installers.
“We’re the business layer. We connect the dots. We can sit in a Stockholm office and serve the whole country.”
From co-living to energy
Elvy was founded by Outinen, Fabian Linzberger, and David Wedar, all experienced startup operators.
Outinen previously ran a co-living startup, Allihoop. Back then Jon Dishotsky, former Giant Ventures partner told him he was “wasting his talent” — and urged him to get into energy.
Outinen sold his shares in Allihoop two years ago and began digging into the energy sector.
“There were decent offerings and strong demand, but no one had really solved the core issue of making it simple for the customer.”
Dishotsky and Giant Ventures are backers of Elvy, alongside New York-based Essential Capital and RTP Global, a family office founded in Russia and an early investor in Russian search engine Yandex. It’s not confirmed if they have invested in the new round.
Read the orginal article: https://sifted.eu/articles/energy-startup-elvy-20m-round/
