"Timing can be the key to success or failure"

The Stuttgart-based start-up Metergrid wants to enable landlords to offer electricity to their tenants. Can it work?

High energy prices, inflation, crisis: at the moment, many people are trying to save money and are thinking about alternative ways to get electricity. Metergrid has one such idea. In the Startbase interview, co-founder Julian Schulz talks about the beginnings of the start-up, the business model and why timing plays such an important role when founding a company.

Mr. Schulz, how did you come up with the idea of founding a start-up in the field of tenant electricity?

We got the idea from a landlord who rents rooms to the University of Stuttgart. He told us about the problem that there is no way for private landlords to offer their tenants electricity. We want to solve that.

How do you explain what your start-up does to someone who has no idea about the subject?

Our customers are private landlords and smaller real estate companies. In the past, the utility company supplied a property with energy. Today, it is possible for properties to supply themselves. Selling electricity to tenants is not as easy as you might think and that's where we come in. There are regulations, metering techniques and software for management. We provide support and make it possible to sell electricity to tenants independently. This gives the landlord an additional business model and the tenants cheaper electricity. We now start much earlier and help customers to implement such a project, covering all areas from planning and profitability checks to finding an installer and drawing up contracts for tenants.

Can you explain the procedure using a specific project?

The customer wants to find an alternative energy supply for himself and his tenants. So he googles tenant electricity and comes across us. On our website, they can request a consultation. We explain to them how the project works and how it will work and whether it is economical for them. If he already has a solar installer, we can make an offer directly and start implementing the project, otherwise we can also put our customers in touch with solar installers from our network. We then calculate electricity prices for the tenants and draw up contracts. In our software, the landlord can, among other things, take daily electricity readings from the relevant tenants and send invoices.

What does your business model look like?

We have three price modules. The first is the onboarding fee, which is always the same because our projects are standardized and the business model is therefore scalable. Then there is a fee for the technology and finally a monthly fee for the software per tenant.

Is any type of house suitable for a project with Metergrid?

There are physical requirements, such as the statics, i.e. the question of whether a PV system can be built on the house at all. This is checked by a solar installer and we check in parallel whether a PV system would be economical and whether such a project would be worthwhile for the landlord.

When does such a project become worthwhile for a landlord?

In 2019, almost 5.2 million households in Germany rented out one or more properties. We address these households with our target group and for the large proportion, from two parties, such a project is worthwhile.

On your website, you advertise "up to 12% yield". How do you come up with that?

The return is made up of the investment costs minus all costs over the term. In the residential sector, we see returns of between five and 12 percent and in the commercial sector even up to 20 percent. Based on previous projects, it has always been possible to generate such a high return. However, we cannot guarantee it, hence "up to".

You completed a financing round at the beginning of the month. What are the next steps?

With this financing round, we want to increase the scalability of our solution. On the one hand, we are building up a PV partner network through new employees so that projects can be implemented promptly and our software can be used. On the other hand, scalability must also be implemented in the software itself. A new financing round is then planned for the first quarter of 2023.

What did you learn when you founded the company?

My biggest learning was about timing: a few years ago, we were confronted with the question of whether our business model would serve a niche or a large sales market. The current events surrounding the energy crisis have led to a sharp increase in customer inquiries. From a business perspective, it was important to recognize the associated problems early on and intervene accordingly. Timing and targeted intervention can make the difference between success and failure.

Looking back, what mistake would you have liked to have avoided?

I would have started thinking big earlier. The mentality I grew up with and also learned from other companies focused more on stability than growth. We made good financial plans right from the start, but didn't expect to become a relevant player. At some point, this attitude changed and we started to focus on the goal of steady growth, tied to the determination to become a relevant player in the market.

Where do you see your start-up in three years' time?

I see Metergrid as the point of contact and expert partner for private landlords in Germany when it comes to tenant electricity. The names Metergrid and Mieterstrom should grow together like Google and "search".